P-note regulation in India

In the background of the hunt for black money, restrictions over P-Notes are tightened. Hence, over the last one decade, SEBI was slowly tightening norms on P-Notes.

♤ In May 2016, SEBI has extended the KYC (Know Your Client) norms and anti-money laundering norms to the PN subscribers also

♤ In July 2017, Sebi had notified stricter norms stipulating a fee of USD 1,000 on each instrument to check any misuse for channelising black money.

♤ SEBI also issued a circular banning FPIs from issuing Participatory Notes for investing in equity derivatives. However, investment in the cash segment can be continued. But this move of eliminating derivate investment in equity shares is a step towards minimising the use of PNs by foreign investors.