Why p-notes are dying a slow death

Once most-preferred route for foreign investments is dying a slow death due to regulatory tightening

During the raging bull market of 2007, 50 cents on every dollar of foreign investment in domestic stocks came through offshore derivative instruments (ODIs), popularly known as participatory notes (p-notes), an instrument that allows a foreign entity to take exposure to the Indian markets without having to register with the local authorities.

Typically, a vehicle that funnels billions of dollars into the Indian economy should be revered by policymakers but the opposite is true for p-notes. Their opaque nature has always stoked fears of misuse and given them a dubious name. Primarily, the secrecy around the end-users of p-notes has