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Investments in Indian markets through participatory notes (P-Notes) surged to the highest level in seven years at Rs 2.72 lakh crore ($43.6 billion) in February.
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 saves time and costs for investors, but the flip side is that the route can also be used for round tripping of black money.
According to the data released by the Securities and Exchange Board of India (SEBI), the total value of P—Note investments in Indian markets (equity, debt and derivatives) rose to Rs 2,71,752 crore at the end of February from Rs 2,68,033 crore in the preceding month.
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 dropped to 11.1 per cent last month from 11.2 per cent in January.
Till a few years ago, P—Notes used to account for more than 50 per cent of the total FII investments, but their share has fallen after SEBI tightened the disclosure norms and other regulations for such investments.
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