P-notes are offshore/overseas derivative instruments (ODIs) 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 due diligence process.
P-Notes are not used within the country but are mainly used outside India for making investments in shares listed in the Indian stock market.
SEBI had permitted FIIS to participate and register in the Indian stock market in 1992.
Earlier, investing through P-Notes is very simple and is very popular amongst FPIs, FIIs.
Note: Investments through participatory notes (P-notes) into Indian capital markets- equity, debt, and derivatives have plunged to over nine-year low due to stringent SEBI norms.