Thursday, January 13 2005 12:06 Hrs (IST) - World Time -

Mumbai: In a bid to allay fears on tax on FII (Foreign Institutional Investments) funds, market regulator SEBI (Security and Exchange Board Of India) today (Jan 13, 2005) said that there was no reason for changing policy norms for FIIs investing in stocks.

"...I would like to send out a single to the market that there is no reason for nay change in the policy stance and that is what has been clarified by the Finance Minister and therefore the market participants should act as they were acting earlier," SEBI chairman G N Bajpai said in Mumbai.

RBI (Reserve Bank Of India) Governer Y V Reddy had yesterday (Jan 12, 2005) created a flutter in the market when he suggested steps like ceiling and taxes to improve the quality and quantity of FII inflows.

After Finance Minister P Chidambaram rejected the suggestion, Reddy later clarified that price-based measures such as taxes could be examined though their effectiveness is arguable and hence not desirable.

Bajpai said that the Finance Minister has already clarified that RBI Governor's statement had been misunderstood and "there is no change in the policy stance with reference to capping either FII inflow or raising any tax on FII inflows."

"RBI Governor has also himself clarified that he is not in favour of capping FIIs, therefore why people should misunderstand (his) statement and interpret it differently," Bajpai told a private news channel.