Investment via P-Notes surges to $43 billion

News

• Investments into Indian markets through participatory notes (P-Notes) has surged to the highest level in over seven years at Rs 2.72 lakh crore (over USD 43 billion) at the end of March 2015.
• 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 is the highest investment since February 2008, when the cumulative value of such investments stood at Rs 3.23 lakh crore.
• The quantum of FII investments through P–Notes too climbed to 11.3 per cent last month from 11.1 per cent in February.
• P-Notes have been accounting for mostly 15-20 per cent of the total FII holdings in India since 2009, while it used to be much higher — in the range of 25-40 per cent — in 2008.

Advantage & Disadvantage

• This saves time and costs for investors, but  this route can also be used for round tripping of black money.