P-NOTES

P-NOTES

Subject: Economics

Context: Investments through participatory notes (P-notes) in the Indian capital market declined to Rs 89,100 crore at March-end, after hitting 33 months high level in the preceding month.

Concept:

• Participatory Notes or P-Notes (PNs) are financial instruments issued by a registered foreign institutional investor (FII) to an overseas investor who wishes to invest in Indian stock markets without registering themselves with the market regulator, the Securities and Exchange Board of India (SEBI).
• P-Notes are Offshore Derivative Investments (ODIs) with equity shares or debt securities as underlying assets.
• 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.