The CPI(M) today slammed market regulator SEBI's decision to relax restrictions on Participatory Notes (PNs), saying it was a "retrograde and illogical" step, which should be put on hold.
"Such an intervention by the SEBI," the party's Politburo said in a statement, "in favour of a set of players, who are holding the market in ransom, is grossly violative of the role of a market regulator."
Yesterday, SEBI lifted 40 per cent cap on total asset held by FIIs under PNs. The ceiling was imposed by the regulator in October last year to check flow of funds from anonymous sources.
CPI(M) demanded that these steps be put on hold and immediate measures initiated to tighten regulation in the Indian financial markets.
"With the stock market witnessing yet another crash yesterday due to the pull out of funds by the FIIs, the SEBI has summarily removed all its earlier restrictions in one stroke in order to woo the FIIs back."
It said the Indian policy establishment had "drawn the worst lessons" from the financial crisis in the US. "SEBI's efforts to appease the FIIs reflect a desperate attempt to shore up the Indian stock market in the backdrop of a global financial meltdown."
On the 50 basis points CRR cut by RBI, the statement said these steps would make the financial system more vulnerable to the dictates of speculative finance and import the financial crisis into India.
