Participatory Notes (P-notes)

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    • Investments in the Indian capital market through Participatory notes (P-notes) dropped to ?87,989 crore at the end of January and experts believe that foreign investors will continue with their negative stance amid the Ukraine crisis.

    About Participatory notes (P-notes)

    • P-Notes are financial instruments required by investors or hedge funds to invest in Indian securities without having to register with the Securities and Exchange Board of India (SEBI). 
      • Investors save time, money and scrutiny associated with direct registration.
    • P-Notes are among the group of investments considered to be Offshore Derivative Investments (ODIs). 
    • The P-Notes include investments in equity, derivatives, debt and other hybrid instruments. 
      • Majority of the investments is in the equity space.
    • 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 directly
      • They, however, need to go through a due diligence process.
    • These investments are also beneficial to India as they provide access to quick money to the Indian capital market. 

    Source:TH