New Delhi: In the current financial year,  Fund inflow into the Indian capital market through participatory notes (P-notes) climbed to Rs 79,513 crore till the end of December 2018, amid Sebi relaxing norms for clubbing of investment limits by FPIs. P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly. They, however, need to go through a due diligence process.

As per source report , the total value of P-note investments in Indian markets - equity, debt, and derivatives - rose to Rs 79,513 crore till December-end from Rs 79,247 crore at November-end.Prior to that, fund inflow through P-notes had hit a nine-and-a-half year low of Rs 66,587 crore. This was the lowest level since March 2009, when the cumulative value of such investments stood at Rs 69,445 crore.

Although Marketmen say that FPIs have stamped their influence strongly in 2018 after their stiff resistance to the proposed changes in norms for recording beneficiary ownership of their funds forced the regulator to have a re-think and eventually change the rules.

Of the total investments made till last month, P-note holdings in equities were at Rs 56,747 crore, while the remaining was in debt and derivatives markets. The quantum of FPI investments via P-notes remains unchanged at 2.5 percent during the period under review.

In July 2017, Sebi had notified stricter norms stipulating a fee of USD 1,000 on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those which are used for hedging purposes.

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