UPSC Prelims 2019 · Question 17 of 99
UPSC Prelims 2019 question on Participatory Notes
- ExamUPSC CSE
- Year2019
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicSecurity Market in India
- DifficultyEasy
- TypeDirect
Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of Indian stock market without registering themselves directly?
Show answer
Answer: D. Participatory Note
Verdict
Correct answer: Participatory Note → Option (d).
Analysis
A Participatory Note (PN or P-Note) is a derivative instrument issued in foreign jurisdictions, by a SEBI registered Foreign Institutional Investor (FII) or its sub-accounts or one of its associates, against underlying Indian securities. The underlying Indian security instrument may be equity, debt, derivatives or may even be an index.
A promissory note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money, either on demand or at a specified future date.
Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note used for short-term borrowings by highly rated corporate borrowers.
Certificate of Deposits is a saving certificate with a fixed maturity date at fixed interest rate issued by commercial banks and financial institutions.