Q. Consider the following statements:
1.Participatory Notes (P-Notes) are debt instruments issued by the Indian government to raise funds domestically.
2.The Securities and Exchange Board of India (SEBI) oversees the issuance and regulation of P-Notes in India.
3.P-Notes can make it difficult to track the true ownership of foreign investments in the Indian stock market.
4.P-Notes can be a source of foreign capital for Indian companies, leading to economic growth.
How many of the statements given above are correct?
Explanation –
Statement 1 is incorrect. Participatory Notes (P-Notes) are not debt instruments issued by the Indian government to raise funds domestically. They are financial instruments used by foreign investors to invest in Indian securities without registering directly with SEBI.
Statements 2, 3 and 4 are correct. SEBI is responsible for regulating and overseeing the issuance and trading of P-Notes in the Indian securities market. P-Notes allow investors to invest in Indian securities without registering with SEBI, it can be difficult to track the true ownership of foreign investments in the Indian stock market. This anonymity raises concerns about potential money laundering and round-tripping of funds. P-Notes allow foreign investors to invest in Indian securities, which can contribute to the inflow of foreign capital. This additional capital can help finance Indian companies’ growth and development, thereby supporting the overall economic growth of the country.
Source: The Times of India
