Slow death for PNs

Rule by fiats may have worked in an earlier era of a world dominated by monarchies. But in the realm of capital markets, it is a truism that this route rarely achieves the policy outcomes as originally intended. In the event, economic incentives and superior alternatives have to be crafted along with outright bans to yield the desired regulatory outcome. The gradual unwinding of overseas investments in the Indian capital market, through the device of participatory notes (PN) issued by foreign institutional investors (FII) is a case in point.

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