'Limiting inflows can have consequences'

As recent experiences in the region have shown, administrative restrictions on capital flows can be blunt and have unintended consequences, US treasury secretary Henry Paulson said today.

He was responding to queries from the media on the restrictions Sebi has put on investments through participatory notes (P-notes) at a round table organised by the Indo-US CEO Forum. 

The curbs on capital inflows from unregistered foreign investors need to be implemented quickly and transparently, Paulson stressed.

Urging India to do away with such restrictions gradually, Paulson said: "These restrictions tend to inhibit and lose effectiveness over time."

"The key to success here is how it is going to be implemented, and that the system will work better in the future than it has in the past," he added.