Foreign Funds can issue P-notes to Investors in GIFT City


  • Foreign funds registered with India’s markets regulator and with operations at GIFT City can now issue participatory notes.
  • Previously, only banks registered with GIFT City could issue P-note. Now, foreign funds registered with Securities and Exchange Board of India (SEBI) and operating in GIFT City can also issue them.
  • Foreign funds issuing the notes would need to meet compliance requirements of IFSCA and the Securities and Exchange Board of India (SEBI).


  • P-Notes, short for Participatory Notes, are financial instruments that let foreign investors indirectly invest in the Indian Stock Market without registering with market regulator SEBI. 
  • P-Notes act like a substitute for underlying Indian company shares.
  • The benefit for foreign investor is that it avoids the hassle of registering with SEBI and offers anonymity.


  • More options for foreign investors: 
         This gives foreign investors more choices for investing in Indian stocks through P-Notes
  • Potential for GIFT City: 
            This move could attract more foreign funds to set up shop in GIFT City, boosting its development as a financial hub.


  • Opacity:  
           P-Notes are criticized for being opaque, meaning the ultimate owner of the Indian stocks might be hidden
  • Stricter regulations:
            Due to these concerns, Indian regulators have imposed stricter compliance rules on P-Notes in the past



  • The authorities are making things easier for foreign investment firms (funds) that establish themselves in GIFT City by relaxing regulations or requirements as they allowed foreign funds in GIFT City to accept investments from Non-Resident Indians (NRIs).
  • Analysts believe this relaxation might incentivize some P-Note structures to shift from overseas jurisdictions to GIFT City, bringing them under Indian regulations.
  • The government aims for GIFT City to become a major international financial center

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