Investments through Participatory Notes (P-Notes) into India's capital market dropped to Rs2.72 lakh crore (about $41 billion) at the end of July. P-Notes, mostly used by overseas HNIs (High Net Worth 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 cost for them, but the flip side is the route can also be used for round-tripping of black money.
According to Sebi data, total value of P-Note investment in Indian markets (equity, debt and derivatives) declined to Rs2.72 lakh crore at July-end, from Rs2.75 lakh crore in the previous month.
Prior to that, investments through P-Notes had hit a seven-year high of Rs2.85 lakh crore in May. This was the highest investment since February 2008, when the cumulative value stood at Rs3.23 lakh crore.
The total outstanding value of P-Notes witnessed a steady rise since January and the momentum continued till March. The investments through this route registered a drop in April, but hit a seven-year in May. The inflows slipped in the last two months (June-July).