Question- Participatory notes are issued by-
(a) Registered foreign institutional investors (FII)
(b) SEBI
(c) RBI
(d) None of the above
Answer-(a)
Related facts-
- Investments through participatory notes into Indian capital markets have been reduced to Rs 80.341 crore which is lowest in last nine years.
- The decline is accredited to various measures taken by the market regulator SEBI to stop the misuse of controversial financial instrument ‘participatory notes’.
About participatory notes- - Participatory Notes commonly known as P-Notes or PNs are financial instruments issued by registered foreign institutional investors (FII) to overseas investors who want to invest in Indian stock markets without registering themselves with the market regulator i.e. the Securities and Exchange Board of India – SEBI.
- These are a popular way to invest in Indian markets as it not only save the investor from regulatory hassles of registration, but also allow them to remain anonymous.
Concern over P- notes- - The main concern over P-notes is of its being anonymous in nature (not reveal the identity of the beneficiary) as these investors could be beyond the reach of Indian regulators.
- It is believed that P-notes may be used for money laundering to bring back unaccounted funds or black money and to manipulate stock prices.
References-
https://www.business-standard.com/article/pti-stories/investment-in-p-notes-continues-to-decline-hits-new-low-of-rs-80-341-cr-118081600666_1.html
https://www.investopedia.com/terms/p/participatorynotes.asp