Investment via P-notes rises marginally to Rs 67,281 cr at Jan-end

Investments through participatory notes (P-notes) in the domestic capital market rose marginally to Rs 67,281 crore at the end of January 2020.

Investments increased after hitting a nearly 11-year low at the end of December 2019 when the total value of P-note investments in Indian markets -- equity, debt, and derivatives -- stood at Rs 64,537 crore, according to Sebi data.

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

Of the total investments made till the end of January, Rs 55,089 crore was invested in equities, Rs 11,517 crore in debt and Rs 59 crore in the derivatives segment.

In the preceding month, the fund inflow through P-notes was the lowest since February 2009, when the cumulative value of such investments stood at Rs 60,948 crore, according to the data.

Lower quantum of investment through P-notes route can be attributed to liberalised norms for foreign portfolio investors (FPIs) by the regulator Sebi, market experts noted.

Sebi in September 2019 simplified KYC requirements and registration process for FPIs. Besides, the regulator broad-based the classification of such investors.

Under the new norms, FPIs have been divided into two categories and around 80 per cent fall under Category-I. Investors planning to set up shop as Category-I are required to fill a simple application form. Earlier, such investors were slotted into three categories -- I, II and III.