P-notes financial investment drops to 8-year low of Rs 1.23 lakh crore

Investments in the Indian capital market through participatory notes () plunged to an over eight-year low of Rs 1.23 lakh crore at September-end in view of stringent norms put in place by regulator.

The overall worth of P-notes investments in Indian– equity, financial obligation and derivatives– dropped to Rs 1,22,684 crore at September-end after striking seven-and-a-half year low of Rs 1,25,037 crore at the end of August, inning accordance with Sebi data.

This is the lowest level considering that August 2009, when the cumulative value of such investments stood at Rs 1,10,355 crore.

P-notes are issued by signed up foreign portfolio investors to overseas players who wish to be part of the Indian stock exchange without registering themselves directly. They, nevertheless, require to go through due diligence.

Of the total financial investments in September, P-note holdings in equities were at Rs 91,160 crore and the staying in debt and derivatives markets.

Besides, the quantum of financial investments by means of P-notes remains the same at 4.1 per cent.

Over the past couple of months, the Securities and Exchange Board of India (Sebi) has taken numerous procedures to stop the abuse of the controversy-ridden participatory notes.

In July, the marketplaces regulator informed more stringent P-notes norms specifying a fee of USD 1,000 that would be imposed on each instrument to examine any abuse for channelising black cash.

Sebi prohibited FPIs from providing such notes where the hidden possession is a derivative, except those which are used for hedging functions.

The move was a follow-through of Sebi’s board approval of a relevant proposal in June. These procedures were a result of a variety of other actions taken by the regulator in the recent past.