Chidambaram rebuts Jayalalithaa's allegations

New Delhi, Jun 3 (UNI) The Union Finance Ministry today dismissed as "baseless" the allegation of "dirty" money finding its way in to the country through participatory notes.

Holding investments through PNs largely responsible for torbulence in the stock market, AIADMK general secretary J Jayalalithaa had accused Finance Minister P Chidambaram of turning a blind eye towards the inflow of "terror" funds through participatory notes.

She had demanded invoking the Benami Transactions (Prohibition) Act to find out the genuineness of these p-notes.

''The allegations made by Ms Jayalalithaa are totally baseless besides betraying a complete lack of understanding of the FII regime that is in force," the ministry's statement, approved by Mr Chidambaram, said.

''The statement of the General Secretary of the AIADMK appears to have been made not after gathering information or a careful study of the subject but purely out of a malicious design to spread misinformation,'' Mr Chidambaram added.

The statement said foreign institutional investors (FIIs) were allowed to invest through P-notes under the supervision of market regulator SEBI, the statement said. Besides, FIIs are required to report at the end of every month, in a prescribed format, all information relating to PNs issued by them including the names of subscribers to the said PNs.

''FIIs are also required to give an undertaking that the FII or its associates have not issued, subscribed or purchased any PNs to/from Indian residents or NRIs or PIOs or Overseas Corporate Bodies (OCBs) during the reporting period," the statement added.

Pointing out that PNs are market instruments that are created and traded overseas, the Indian government, therefore, could not ban or control the issue of PNs, these could only be regulated and it is indeed being done by the security and exchange board of India (SEBI), the Finance Ministry said.

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