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UPSC Prelims 2019 Paper-1 📅 02 Jun, 2019

Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?

A
Certificate of Deposit
B
Commercial Paper
C
Promissory Note
D
Participatory Note
Result Summary
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APEDIA

UPSC Prelims
2019 • 02 Jun, 2019 • Paper-1
Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?
Correct Answer
Participatory Note
Instrument Mechanism Analysis: Participatory Notes (commonly known as P-Notes or PNs) are specialized offshore financial derivative instruments used in Indian e......
Ref/Book : UPSC Prelims 2019
Ref. Subject Economy
Chapter -
Ref. Topic Financial Markets
Pg. No -
💡 Analysis & Explanation
Instrument Mechanism Analysis ▼
Participatory Notes (commonly known as P-Notes or PNs) are specialized offshore financial derivative instruments used in Indian equity markets.
Regulatory Context ▼
They cater to overseas investors, high net-worth individuals, or hedge funds who wish to invest in Indian stocks without undergoing the complex, time-consuming, and stringent registration processes mandated by the Securities and Exchange Board of India (SEBI). The SEBI-registered Foreign Portfolio Investors (FPIs) purchase the actual shares and issue these notes linked to those shares to the overseas investors.
Conclusion ▼
Option D perfectly describes this anonymous investment route.
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