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As we all know Securities & Exchange Board of India (SEBI) has taken some corrective steps to restrict functioning of Participatory Notes (P-Notes) in Indian Stock Markets. Why P-Notes are considered dangerous for the financial markets of a country?                           [OBC 2008]

[a] This allows a foreign investor to invest funds without knowing the history/ financial health of a company. If the company fails foreign investors lose their money. Govt of India does not want this as this will bring a bad name to the country.

[b] P-Notes allow foreign investors to buy shares of blue chip companies without following Konw Your Customer (KYC) norms. Hence money invested here may not be from a valid and legal source.

[c] P-Notes are launched to arrange funds only for social schemes. Due to huge funds available with NRIs for investment they are sending it in bulk. Hence the cost of such investments is very high and it is not commercially viable for banks to accept such investments.

A)  Only [a] is correct

B)  Only [b] is correct

C)  Only [c] is correct

D)  Both [a] and [b] are correct

E)  None of these