THE finance ministry has set up a working group to come up with a more liberal policy to attract investments by foreign institutional investors (FII) in shares and bonds in the country. The group will also look at the role of participatory notes (PNs) through which unregistered entities invest in the domestic stock markets. The 16-member group on portfolio investments, to be headed by UTI Mutual Fund chairman and managing director U.K. Sinha, will also review the policies on other foreign portfolio investments by NRIs and venture capital
funds, sources said.

The panel has been given four months to submit its report. The group has been asked to
review the existing policy on foreign portfolio inflows and suggest steps to smoothen foreign investment nflows into the country, a senior official said. The group will examine the rationale of securities transaction tax and stamp duty.