The inflow through P-notes in December was the lowest since February 2009, when the cumulative value of such investments stood at Rs 60,948 crore.
The majority of hedge funds which came in through the participatory notes (p-notes) route have opted to register themselves directly as foreign portfolio investors (FPIs).According to latest Sebi data, the notional value of p-note exposure to derivatives has dipped 91 per cent to Rs 50.72 billion as of November 2017 from Rs 557.8 billion in January. In July last year, the Securities and Exchange Board of India (Sebi) had issued a circular banning p-note holders from taking naked exposure to the derivatives market. It said all existing positions would have to be squared off by the end of 2020 or date of maturity of the instrument, whichever was earlier.According to experts, hedge funds with reasonable India exposure had started the process of (direct) registration within a few weeks of the Sebi circular. While the majority of hedge funds are coming direct, a few have exited the market, given their insignificant dealings in Indian derivatives relative to their overall operations."With ..
The P-notes business does not involve financing or funding component