Safeguards in place to check misuse of P-Notes: Sinha

The government today said safeguards have been put in place to prevent misuse of Participatory Notes (P-Notes).
P-Notes, mostly used by overseas HNIs (High Networth Individuals), hedge funds and other foreign institutions, allow such investors to invest in Indian markets through registered Foreign Institutional Investors (FIIs).
This saves time and costs for investors, but the flip side is the route can be used for round tripping of black money.
"... Safeguards have been put in place to prevent the misuse of PN route," Minister of State for Finance Jayant Sinha said in a written reply to the Lok Sabha.
Capital market regulator Sebi has taken various steps to prevent misuse of P-Notes.

According to guidelines, P-Notes can be issued only to those entities regulated by the relevant authority in the countries of their incorporation that comply with 'Know Your Client'(KYC) norms.

Besides, Foreign Portfolio Investors (FPIs) are barred from issuing P-Notes to resident Indians or NRIs (non-resident Indians) and required to give an undertaking to this effect.
The Minister said there is no information wherein Indian entities/investors are using the PN route.
At the end of March 31, 2015, investments into Indian markets through P-Notes stood at Rs 2.72 lakh crore (over USD 43 billion).