IMF urges India not to curb capital inflows

International Monetary Fund on Friday advised India against putting any restrictions on capital inflows in the face of appreciating rupee, saying any such move may undermine confidence of foreign investors on the Indian economy.
"It has been said or asked or written that India should implement some limits to the capital inflows. The problem with this kind of thing is that it may undermine confidence on the Indian economy... It would certainly have influence on capital inflows but not always a good influence," IMF new managing director Dominique Strauss-Kahn told reporters.
"I think the Indian authorities should think over several times before implementing this kind of an instrument (policy to curb capital inflows)," said Strauss-Kahn, who took over as IMF Chief Thursday.
Capital markets regulator Securities and Exchange Board of India (SEBI) last month imposed certain restrictions on Participatory Notes, which are instruments used by unregistered foreign entities to invest in Indian equity markets. But the aim of that move was to bring transparency in the markets and not to control capital, SEBI Chairman M. Damodaran had said earlier this week.