P-Note Investments by FPIs Decline In June After Four Months Of Growth
Participatory notes are issued by registered FPIs to overseas investors who wish to be a part of Indian stock markets without registering themselves directly. (Photographer: Dhiraj Singh/Bloomberg)

P-Note Investments by FPIs Decline In June After Four Months Of Growth

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Investments using participatory notes in the Indian capital markets slipped to Rs 81,913 crore in June after posting growth in the previous four months.

Investments via P-Notes stood at Rs 73,428 crore in February, Rs 78,110 crore in March, Rs 81,220 crore in April and Rs 82,619 in May.

P-Notes are issued by registered foreign portfolio investors to overseas investors who wish to be a part of the Indian stock markets without registering themselves directly after undergoing due diligence process.

According to the latest data from the Securities and Exchange Board of India, 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 derivatives market. That’s a decline of 0.85 percent 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," said Ishan Bansal, co-founder of online investment firm Groww.

In July 2017, SEBI had notified stricter norms stipulating a fee of $1,000 on each investment instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing P-Notes where the underlying asset is a derivative, except those that are used for hedging purposes.

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