P-note investments hit 4-month high in March

Investments in Indian capital markets via participatory notes (P-notes) have surprisingly increased to four-month high of Rs 1.78 lakh crore in month of March at the end of FY17. The sharp surge was witnessed despite stringent norms put in place by SEBI to curb inflow of illegal funds.

P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be a part of the Indian stock markets without registering themselves directly. They, however, need to go through a proper due diligence process.

As per SEBI, the total value of P-note investments in Indian markets such as equity, debt and derivatives increased 4.85 per cent to Rs 178,437 crore in March on a yearly basis. Out of the total investments, P-note holdings in equities were at Rs 1.12 lakh crore at March-end and the remaining were in debt and derivatives markets.

The SEBI board is expected to further tighten the norms in the upcoming week by barring resident Indians, NRIs and entities owned by them from investing via P-notes in a move to curb possible round tripping.