Which of the following is issued by registered foreign portfolio inves

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?

[amp_mcq option1=”Certificate of Deposit” option2=”Commercial Paper” option3=”Promissory Note” option4=”Participatory Note” correct=”option4″]

This question was previously asked in

UPSC IAS – 2019

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Participatory Notes (P-Notes) are financial instruments used by registered Foreign Portfolio Investors (FPIs) to invest in Indian securities without directly registering themselves with the Securities and Exchange Board of India (SEBI). These notes are issued by the FPIs to overseas investors, who essentially gain exposure to the Indian stock market performance through these instruments. This allows overseas investors who may find the direct registration process cumbersome to participate in the Indian market.

Participatory Notes (P-Notes) allow unregistered overseas investors to indirectly invest in Indian securities through registered FPIs.

Certificate of Deposit (CD) is a short-term debt instrument issued by banks. Commercial Paper (CP) is a short-term unsecured promissory note issued by companies. A Promissory Note is a general term for a written promise to pay a specific amount. None of these instruments serve the specific function of enabling indirect access to the Indian stock market for overseas investors via registered intermediaries in the way P-Notes do.

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