Participatory notes flows into India have seen a sudden spike to Rs.62,138 crore in June 2020. Interestingly, this is the third consecutive monthly rise in P-note flows. As you must be aware, P-Notes are issued by FPIs to overseas investors who do not want to go through the rigors of registering with SEBI so as to reduce the compliance requirements.

This is a trend shift because P-Note flows had slowed in the last few years after SEBI made it prohibitively expensive and also practically difficult to bring in money through P-Notes. The P-note level had fallen to an all-time low of Rs.48,000 crore in the end of March this year. SEBI has been trying to discourage FPI flows through P-Notes due to lack of transparency.