Investment via P-notes participatory notes slip to Rs 1.26 lakh crore in October

Investment via P-notes participatory notes slip to Rs 1.26 lakh crore in October

Subject: Economy

Section: Capital Markets

Context: Investments in the Indian capital markets through participatory notes (P-notes) dropped to Rs 1.26 lakh crore in October-end after rising for seven consecutive months. The latest data includes the value of participatory note investments in Indian equity, debt, and hybrid securities.

P NOTES

• Participatory notes (P-notes) are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be a part of the Indian stock market without registering themselves under SEBI directly after going through a due diligence process.
• The increase in P-notes investment is in line with the higher net inflows of Foreign Portfolio Investors (FPIs) in the cash segment.
• P-Notes are Offshore Derivative Investments (ODIs) with equity shares or debt securities as underlying assets, as they are used by the investors abroad but not within India.
• They provide liquidity to the investors as they can transfer the ownership by endorsement and delivery.
• While the FIIs have to report all such investments each quarter to SEBI, they need not disclose the identity of the actual investors.