InvestorQ : What are P-Notes and why is it being reported that FPIs are relying less on P-Notes route nowadays? Is that correct?
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What are P-Notes and why is it being reported that FPIs are relying less on P-Notes route nowadays? Is that correct?

Answer
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Mahima Roy answered.
11 months ago


Over the last few years, the importance of P-notes is gradually reducing. P-Notes or participatory notes are issued to investors who do not want to go through the regulatory hassles of registering as FPIs and so they open sub-accounts with the FPI and the FPI in turn issues P-notes against these. In the last 2 years, SEBI has tightened the P-Note norms by making higher disclosure mandatory and also by increasing the fees and costs of P-Notes. The result is there to see in the table below.

Month

Total value of PNs (Rs. in crore)

Total value of PNs excluding derivatives (Rs. in crore)

Assets Under Custody of FPIs (Rs. in crore)

Percentage of PNs of total AUC

Percentage of PNs excluding derivatives of total AUC

Apr-10

1,54,340

1,40,397

9,27,194

16.6

15.1

May-10

1,59,927

1,36,415

8,83,379

18.1

15.4

Jun-10

1,68,016

1,38,881

9,27,468

18.1

15.0

Jul-10

1,65,749

1,44,343

9,71,022

17.1

14.9

Aug-10

1,63,657

1,47,473

9,99,130

16.4

14.8

Sep-10

2,00,927

1,45,383

11,24,352

17.9

12.9

Oct-10

1,82,056

1,48,142

11,51,339

15.8

12.9

Nov-10

1,88,325

1,54,950

11,36,754

16.6

13.6

Dec-10

1,75,584

1,41,894

11,64,623

15.1

12.2

Jan-11

1,74,485

1,34,838

10,57,474

16.5

12.8

Feb-11

1,71,601

1,26,329

10,16,892

16.9

12.4

Mar-11

1,75,097

1,33,098

11,06,550

15.8

12.0

Apr-11

1,66,444

1,18,230

11,06,718

15.0

11.0

May-11

2,11,199

1,61,210

10,81,996

20.0

15.0

Jun-11

1,53,291

1,07,640

10,86,388

14.0

10.0

Jul-11

1,50,414

1,02,954

10,77,096

14.0

10.0

Aug-11

1,52,288

1,00,454

9,85,893

15.0

10.0

Sep-11

1,75,291

1,15,311

9,79,164

18.0

12.0

Oct-11

1,80,002

1,16,475

10,25,530

18.0

11.0

Nov-11

1,79,035

1,17,532

9,38,098

19.0

13.0

Dec-11

1,38,711

93,563

9,17,930

15.1

10.2

Jan-12

1,57,697

1,14,092

10,43,130

15.1

10.9

Feb-12

1,83,151

1,28,606

11,15,648

16.4

11.5

Mar-12

1,65,832

1,15,332

11,07,399

15.0

10.4

Apr-12

1,30,012

86,785

10,93,955

11.9

7.9

May-12

1,28,895

65,472

10,40,547

12.4

6.3

Jun-12

1,29,851

69,523

10,90,359

11.9

6.4

Jul-12

1,29,586

68,677

10,96,492

11.8

6.3

Aug-12

1,41,710

68,450

11,13,894

12.7

6.1

Sep-12

1,46,600

82,379

12,19,163

12.0

6.8

Oct-12

1,75,829

95,536

12,21,900

14.4

7.8

Nov-12

1,77,164

94,658

12,89,612

13.7

7.3

Dec-12

1,51,084

1,01,666

13,35,189

11.3

7.6

Jan-13

1,62,139

1,05,910

13,70,866

11.8

7.7

Feb-13

1,64,271

1,05,258

13,32,496

12.3

7.9

Mar-13

1,47,905

1,04,229

13,36,557

11.1

7.8

Apr-13

1,57,578

1,11,486

13,91,619

11.3

8.0

May-13

1,68,263

1,10,904

14,38,980

11.7

7.7

Jun-13

1,47,498

99,763

13,49,184

10.9

7.4

Jul-13

1,48,118

94,814

12,93,687

11.5

7.3

Aug-13

1,64,817

1,02,224

12,42,154

13.3

8.2

Sep-13

1,71,154

1,06,527

13,10,194

13.1

8.1

Oct-13

1,83,862

1,11,847

14,16,560

13.0

7.9

Nov-13

1,83,237

1,11,567

14,06,462

13.0

7.9

Dec-13

1,67,566

1,15,181

14,64,355

11.4

7.9

Jan-14

1,63,348

1,11,646

14,26,875

11.5

7.8

Feb-14

1,72,738

1,13,600

14,73,802

11.7

7.7

Mar-14

2,07,639

1,35,821

15,93,869

13.0

8.5

Apr-14

1,87,486

1,27,627

16,06,596

11.7

7.9

May-14

2,11,740

1,45,258

17,70,781

12.0

8.2

Jun-14

2,24,248

1,58,532

19,09,400

11.7

8.3

Jul-14

2,08,284

1,58,303

19,71,822

10.6

8.0

Aug-14

2,11,499

1,61,682

20,47,175

10.3

7.9

Sep-14

2,22,394

1,68,322

20,84,161

10.7

8.1

Oct-14

2,65,675

1,86,496

21,71,276

12.2

8.6

Nov-14

2,49,210

1,87,039

22,67,910

11.0

8.2

Dec-14

2,36,677

1,90,595

22,45,156

10.5

8.5

Jan-15

2,68,033

2,08,783

24,02,441

11.2

8.7

Feb-15

2,71,752

2,08,447

24,56,321

11.1

8.5

Mar-15

2,72,078

2,11,605

24,11,810

11.3

8.8

Apr-15

2,68,168

2,06,374

23,55,308

11.4

8.8

May-15

2,84,826

2,13,163

24,13,049

11.8

8.8

Jun-15

2,75,436

2,08,578

23,86,457

11.5

8.7

Jul-15

2,72,053

2,05,444

24,53,014

11.1

8.4

Aug-15

2,53,310

1,88,027

23,13,548

10.9

8.1

Sep-15

2,53,875

1,86,849

23,03,513

11.0

8.1

Oct-15

2,58,287

1,92,630

23,44,179

11.0

8.2

Nov-15

2,54,600

1,91,190

23,08,769

11.0

8.3

Dec-15

2,35,534

1,80,072

23,20,539

10.1

7.8

Jan-16

2,31,317

1,71,732

22,00,837

10.5

7.8

Feb-16

2,17,740

1,60,946

20,43,139

10.7

7.9

Mar-16

2,23,077

1,69,470

22,24,537

10.0

7.6

Apr-16

2,12,132

1,61,280

22,81,346

9.3

7.1

May-16

2,15,338

1,60,867

23,48,618

9.2

6.8

Jun-16

2,10,731

1,61,379

23,87,685

8.8

6.8

Jul-16

2,12,179

1,62,921

25,14,038

8.4

6.5

Aug-16

2,16,232

1,58,848

25,65,304

8.4

6.2

Sep-16

2,12,509

1,52,624

25,56,244

8.3

6.0

Oct-16

1,99,987

1,43,235

25,77,073

7.8

5.6

Nov-16

1,79,648

1,26,596

24,09,042

7.5

5.3

Dec-16

1,57,306

1,12,243

23,48,007

6.7

4.8

Jan-17

1,75,088

1,19,309

24,56,716

7.1

4.9

Feb-17

1,70,191

1,15,413

25,63,431

6.6

4.5

Mar-17

1,78,437

1,24,277

27,05,729

6.6

4.6

Apr-17

1,68,545

1,28,380

27,86,083

6.0

4.6

May-17

1,80,718

1,33,045

28,56,637

6.3

4.7

Jun-17

1,65,241

1,32,785

28,83,104

5.7

4.6

Jul-17

1,35,297

1,27,075

30,55,984

4.4

4.2

Aug-17

1,25,037

1,16,393

30,35,509

4.1

3.8

Sep-17

1,22,684

1,13,706

30,03,476

4.1

3.8

Oct-17

1,31,006

1,20,629

31,70,194

4.1

3.8

Nov-17

1,28,639

1,23,567

31,88,354

4.0

3.9

Dec-17

1,52,243

1,49,243

32,80,283

4.6

4.5

Jan-18

1,19,556

1,16,472

33,81,677

3.5

3.4

Feb-18

1,06,760

1,05,137

32,41,324

3.3

3.2

Mar-18

1,06,403

1,02,726

31,48,349

3.4

3.3

Apr-18

1,00,245

99,595

33,19,175

3.0

3.0

May-18

93,497

89,974

31,77,685

2.9

2.8

Jun-18

83,688

80,279

31,88,252

2.6

2.5

Jul-18

80,341

76,769

33,34,518

2.4

2.3

Aug-18

84,647

80,882

34,31,511

2.5

2.4

Sep-18

79,548

75,641

31,38,334

2.5

2.4

Oct-18

66,587

65,147

29,82,324

2.2

2.2

Nov-18

79,247

78,015

31,08,886

2.5

2.5

Dec-18

79,513

78,558

31,38,205

2.5

2.5

What clearly emerges from the table above is that the volumes of P-Notes have progressively come down and also the percentage share of P-notes in the overall FPI game has come down substantially and that is largely thanks to the stringent regulations surrounding the P-Note issue and maintenance.