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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.

                                                                                                                                                                                                                                           

                                                                                                                                                                                                                                                             

                                                                                                                                                                                                                                       BEST IAS ACADEMY IN COIMBATORE