Participatory Notes investment into India reaches ₹2.54 lakh crore ($39 billion)

October 26, 2015

PG Staff

New Delhi, Oct 26

Participatory Notes, or P-Notes, mode investment into India’s capital markets grew to ₹254,000 crore (around $39 billion) at the end of September compared with the previous month, according to data by market regulator SEBI. Securities and Exchange Board of India data showed that earlier investment through P-Notes has been declining in the June-August period after touching a seven-year high of Rs.285,000 crore ($43.9 billion) in May. This was the highest investment since February 2008, when the cumulative value stood at ₹323,000 crore ($49.72 billion).

The total value of P-Notes investment in Indian markets increased to ₹253,875 crore ($39.1 billion) at September-end, from ₹253,310 crore ($38.99 billion) in the previous month. The drop in investment via P-Notes cames after the Supreme Court-appointed Special Investigation Team (SIT) on black money asked SEBI to review its regulations to help identify the end-users. P-Notes, mostly used by overseas individual investors, hedge funds and foreign institutions, allow investors to invest in Indian markets through registered foreign institutional investors (FIIs).

These used to account for more than 50% of total FII investment in India till a few years ago, but their share has fallen after SEBI tightened disclosure norms and other regulations.

Currently, P-Notes make up around 15-20% of the total FII investment in India, as against around 25-40% in 2008. The SIT on black money had recommended that the know your client norms for P-Notes be further improved. However, the government has recently said it has no intention of putting an overnight ban on P-Notes and it is consulting the Reserve Bank of India and SEBI on the recommendations of the SIT.

Note:
1. The conversion rate used in this article is 1 US Dollar = 64.97 Rupees.
2. Some of the content is used from IANS.
3. Text in Bold points to additional data on the topic.