P-notes are issued by registered Foreign Portfolio Investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly after going through a due diligence process.
Investments through participatory notes (P-notes) in the Indian capital market slipped to Rs 81,913 crore in June after posting growth for the previous four months. In the previous four months, cumulative investment of Rs 73,428 crore was made till the end of February, Rs 78,110 crore till March-end, Rs 81,220 crore till April-end and Rs 82,619 till May-end.
P-notes are issued by registered Foreign Portfolio Investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly after going through a due diligence process. According to the latest data from the Securities and Exchange Board of India (Sebi), the total value of P-note investments in the Indian markets — equity, debt, and derivatives — fell to Rs 81,913 crore till June-end.
Out of the total investments made till the end of June, Rs 56,664 crore was invested in the equities segment, Rs 24,428 crore in debt and Rs 821 crore in the derivatives market. There is a decline of 0.85 per cent in the total value of P-notes investment from the previous month when the total investment stood at Rs 82,619 crore.
“The use of P-notes has been on a decline since 2017 because of gradual measures taken by regulatory bodies to curb its usage. A healthy number of people have been seen shifting from P-notes to FPIs in the last few months as the process has been made easier,” Ishan Bansal, co-founder of Groww, said.
In July 2017, Sebi had notified stricter norms stipulating a fee of USD 1,000 on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those that are used for hedging purposes.