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? [2019]

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?

Participatory notes are often referred to as PNs or P-Notes. These are financial instruments used by investors and hedge funds to invest in Indian securities, and no SEBI registration is required. Investments flowing in through PNs are considered offshore derivative investments (ODIs). In 2017, SEBI restricted the use of participatory notes in derivatives to hedging only. The tightening of regulations over the years took a toll on their popularity. As of May 2024, less than 2 per cent of outstanding FPI assets came through this route.

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A certificate of deposit (CD) is a type of savings account that pays a fixed interest rate on money held for an agreed-upon period of time. CD rates are usually higher than savings accounts, but you lose withdrawal flexibility. If you withdraw your CD funds early, you’ll be charged a penalty. CDs come in a variety of terms from 3-, 6-, or 12-month terms to 4-, 5-, and even 10-year terms.

Commercial paper is an unsecured, short-term debt instrument issued by corporations. It’s typically used to finance short-term liabilities such as payroll, accounts payable, and inventories.

A promissory note is a written promise by one party (the note’s issuer or maker) to pay another party (the note’s payee) a definite sum of money, either on demand or at a specified future date. A promissory note typically contains all the terms involved, such as the principal debt amount, interest rate, maturity date, payment schedule, the date and place of issuance, and the issuer’s signature.