What are P-Notes?

What are P-Notes?

Participatory notes (P-Notes) are financial instruments used by hedge funds not registered with Sebi.

* Hedge funds invest in Indian stocks through custodians in India

* P-Notes are issued by registered FIIs to overseas investors who want to invest in India without registering

How do P-Notes work?

* India-based brokerages buy India-based securities and then issue P-Notes to foreign investors

* Any dividends or capital gains collected from the underlying securities go back to the investors