Participatory Notes (P-notes)

P-notes are offshore/overseas derivative instruments (ODIs) issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly.

P-notes have Indian stocks as their underlying assets.

They, however, need to go through due diligence process.

P-Notes are not used within the country but are mainly used outside India for making investments in shares listed in the Indian stock market.

SEBI had permitted FIIS to participate and register in the Indian stock market in 1992.

Why in News? Investment via P-Notes is declining using P-Notes.