Investment in P-notes continues to decline; plunges to over nine-year low of Rs 80,341 crore


New Delhi: Investments by means of participatory notes into Indian capital markets plunged to over nine-year low of Rs 80,341 crore until July-end amid stringent norms put in place by the watchdog SEBI to examine misuse of those devices.

P-notes are issued by registered overseas portfolio traders (FPIs) to abroad traders who want to be a part of the Indian inventory market with out registering themselves straight. They, nonetheless, have to undergo the due diligence course of.

In accordance with the SEBI information, the full worth of P-note investments in Indian markets – fairness, debt, and derivatives – slumped to a low of Rs 80,341 crore until July-end from Rs 83,688 crore clocked by June-end. Previous to that, in Could the determine was Rs 93,497 crore.

That is the bottom stage since April 2009 when the cumulative worth of such investments stood at Rs 72,314 crore.

Representational picture. Reuters

Of the full investments made final month, P-note holdings in equities had been at Rs 60,550 crore and the remaining in debt and derivatives markets.

Moreover, the quantum of FPI investments through P-notes dropped to 2.four % throughout the interval beneath evaluation from 2.6 % within the previous month.

P-note investments had been on a decline since June final yr and hit an over eight-year low in September. Nevertheless, these investments rose barely in October however fell once more in November and the pattern continued until July this yr.

The decline may very well be attributed to a number of measures taken by the market watchdog to cease the misuse of the controversy-ridden participatory notes.

In July 2017, SEBI had notified stricter norms stipulating a price of $1,000 on every instrument to examine any misuse for channelising black cash. It had additionally prohibited FPIs from issuing such notes the place the underlying asset is a by-product, besides these that are used for hedging functions.

These measures had been an final result of a slew of different steps taken by the regulator within the latest previous.

In April final yr, the Securities and Change Board of India (SEBI) had barred resident Indians, NRIs and entities owned by them from making funding by means of P-notes.



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