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PARTICIPATORY-NOTE (P-NOTES)
PARTICIPATORY-NOTE (P-NOTES)
Why in News
Securities and Exchange Board of India (SEBI) has announced that the value of Participatory-Note (P-Notes) investments in Indian markets have declined in 2022.
Reasons for Declining
- Foreign investors were aggressive sellers
- Investors have been cutting their holdings in risk assets
- The Ukraine geopolitical situation
- High risk involved in returns in assets
- COVID 19 (Omicron)
Participatory Note
- P-notes are Offshore Derivative Instruments (ODIs) 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.
- FPIs are non-residents who invest in Indian securities like shares, government bonds, corporate bonds, etc.
Foreign Portfolio Investment
- FPI involves holding financial assets from a country outside of the investor's own.
- Holdings can include stocks, GDRs (Global Depository Receipt), bonds, mutual funds, and exchange traded funds.
- A GDR is a bank certificate issued in more than one country for shares in a foreign company
- Along with FDI (Foregn Direct Investment), FPI is one of the common ways for investors to participate in an overseas economy, especially retail investors.
- Unlike FDI, FPI consists of passive ownership, investors have no control over ventures or direct ownership of property or a stake in a company.
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