Why in News
The slight drop in p-note investments in the month of January
In January 2024 1.43 in ₹ lakh crore was the investment.
Investments through participatory notes (p-notes) in Indian markets declined in January due to cautious foreign investor behavior amid high valuations.
What is p-note
A participatory note, also known as a PN, is a financial instrument issued by a registered Foreign Institutional Investor (FII) to an overseas investor who wishes to invest in Indian securities.
This can be without registering themselves directly with the SEBI, the market regulator in India.
Here's a breakdown of key points about P-notes:
Function: They act as offshore derivative instruments (ODIs), meaning they are not traded on Indian stock exchanges but represent underlying Indian securities like shares, bonds, etc.
Issuance: Registered FIIs, such as foreign banks and asset management companies, issue P-notes to overseas investors seeking access to Indian markets.
Benefits:
Easy access: P-notes offer a simpler and faster way for foreign investors to enter the Indian market compared to the complex registration process required by SEBI.
Confidentiality: Investors can maintain anonymity as their identities are not directly disclosed to SEBI.
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