SEBI was highly concerned about the investment through P Notes . Due to Tax concern which Got strarted after the Finance Bill invetment through P Notes started decreasing but after the change of FM and after the change in the stand taken by Govt on GAAR and retrospective Tax law investment through P Note has again started increasing .
As on date appx USD 32.4 Billion of investment in Indian Equity and Debt Market is through P Notes .
P Note route is generally adopted by HNI staying out of India , who do not want to get themself registered with SEBI as it involve lengthy formalities
Participatory notes are financial instruments used by investors or hedge funds that are not registered with SEBI to invest in Indian securities.
The brokerages buy India-based securities and then issue participatory notes to foreign investors. Any dividends or capital gains collected from the underlying securities go back to the investors.
A PN is an offshore derivative instrument (ODI).
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