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No 'knee-jerk' reaction to money laundering report: Jaitley

india Updated: Jul 27, 2015 14:46 IST

The government will not react in a "knee-jerk" manner on a special investigation team report that suggested greater oversight of money laundering in stocks, finance minister Arun Jaitley said on Monday.

The Supreme Court-appointed team said the market regulator, Securities and Exchange Board of India (SEBI), needed to ensure it can better identify owners behind overseas investments into participatory-notes (P-notes), or popular derivative products that track domestic equity markets.

Jaitley, however, said the government would apply its mind on the recommendations in due course and would avoid any decision that could hurt investor sentiment.

"It is too early to say what view the government would take. But it will certainly not take any such action in a knee-jerk reaction, particularly one which has any adverse impact on investment environment," he told reporters in his Parliament House Office.

"No such step would be taken which could adversely impact investment sentiment in the country," Jaitley said.

The SIT had suggested that the SEBI to put in place regulations to help identify individuals holding participatory notes or offshore derivative instruments (ODIs), and take other steps required to curb black money and tax evasion through the stock market route.

A similar recommendation in 2007 had triggered a major collapse in the stock market, prompting the then finance minister P Chidambaram to announce that no such measures would be taken by the government.

Participatory Notes or P-Notes are instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator.