Impacted by stringent norms put in place by Securities and Exchange Board of India (SEBI) to curb the inflow of illicit funds, the share of foreign portfolio investments (FPI) through participatory notes (P-notes) has declined to 4-month low of Rs 1.68 lakh crore at the end of April. According to the data released by SEBI, the total value of P-Notes investment in Indian markets including equity, debt and derivatives, at April-end, declined to Rs 1,68,545 crore, from Rs 1,78,437 crore at the end of March. The total investment value through P-notes stood at Rs 1,70,191 crore in February-end and Rs 1,75,088 crore in January-end.
Of the total, P-note holdings in equities at April-end were at Rs 1,09,541 crore, while in debts and derivatives were at Rs 18,839 crore and Rs 40,165 crore respectively. The quantum of FPI investments via P-Notes decreased to 6 percent in April, from 6.6 percent in the preceding month. This was the lowest level of investment through the route since December, when the cumulative value of such investment stood at Rs 1.57 lakh crore.
The Special Investigation Team (SIT) on black money, set up by the Supreme Court, had recommended a slew of measures, including the need for Sebi to come up with stricter regulations on P-notes. Following which in order to strengthen the regulatory framework for P-notes, Sebi had recently tightened the norm by barring resident Indians, NRIs and entities owned by them from making investment through P-notes.