P-NOTEs

TOPIC: Economy

Context- Investments in capital market through participatory notes (P-notes) dropped to ₹87,989 crore at the end of January.

Concept-

A participatory note, commonly known as a P-note or PN.
P-notes are Offshore Derivative Instruments (ODIs) issued by registered Foreign Portfolio Investors (FPIs) to overseas investors who wish to be a part of the Indian stock market without registering themselves directly with the market regulator, the Securities and Exchange Board of India (SEBI).
P-notes have Indian stocks as their underlying assets.
SEBI permitted foreign institutional investors to register and participate in the Indian stock market in 1992.
These notes are a unique Indian invention started in 2000 by SEBI to enable foreign corporates and high net worth investors enter the Indian market without having to go through the process of registering as Foreign Institutional Investor (FII).
Participatory notes are instruments used for making investments in the stock markets.
However, they are not used within the country; they are used outside of India for making investments in stocks listed on Indian stock markets, which is why they’re also referred to as offshore derivative instruments.