Date:02/09/2006 URL: http://www.thehindu.com/2006/09/02/stories/2006090213851500.htm

Business

Forex expert's dissenting note

Special Correspondent

CHENNAI: A. V. Rajwade, an expert on the foreign exchange market and a member of the Committee on Fuller Capital Account Convertibility, has expressed dissenting views on some of the committee's recommendations, including on the question of banning Participatory Notes (PNs) as an instrument for foreign portfolio investment. .

In his dissenting remarks, Mr. Rajwade said that the issue of PNs had been "gone into in more detail" by the Lahiri Committee and that "its views should be respected".

While the present committee has recommended only a progressive increase in the ceiling on the investment in the rupee bond market, Mr. Rajwade has expressed the view that "investments in the rupee bond market, both G-sec and corporate bonds, should be freely allowed".

Mr. Rajwade said that any ceiling has a negative connotation and dissuades intending investors. Given the huge fund requirements of the infrastructure sector, "there is obviously a need to lengthen maturities in the bond market, and broaden the base of investors, particularly long term investors like pensions".