Participatory Note is issued by registered foreign portfolio investors (FPIs) to overseas investors who want to be part of the Indian stock market without registering themselves directly. Participatory Notes, also known as P-Notes or PN, are financial instruments used by foreign investors to invest in Indian securities without being registered with the Securities and Exchange Board of India (SEBI).

Explanation:
- Participatory Notes (PNs): Participatory Notes are offshore derivative instruments issued by registered FPIs to overseas investors. These notes represent an underlying Indian security such as stocks, derivatives, or other securities.
- Purpose: The primary purpose of P-Notes is to provide foreign investors with an easy route to invest in the Indian stock market without going through the registration process with SEBI.
- Anonymity: P-Notes allow foreign investors to maintain anonymity as the names of the beneficial owners are not disclosed to the Indian authorities. This feature makes it attractive for investors who want to keep their investments confidential.
- Regulatory Framework: SEBI regulates the issuance and trading of P-Notes. Registered FPIs are required to comply with SEBI regulations and report the issuance and outstanding positions of P-Notes on a regular basis.
- Advantages: P-Notes provide flexibility and ease of investment for foreign investors, as they can easily enter and exit the Indian market. It eliminates the need for direct registration, which can be a time-consuming and complex process for overseas investors.
- Criticisms: P-Notes have faced criticism in the past due to concerns about money laundering and the potential for misuse. However, SEBI has implemented stricter regulations and enhanced transparency to address these concerns and ensure the integrity of the Indian stock market.
- Transparency: SEBI has introduced regulations to increase transparency in P-Note transactions. It requires FPIs to maintain records of P-Note holders and provide information to SEBI when requested.
- Recent Trends: Over the years, the popularity of P-Notes has decreased as SEBI has tightened regulations and enhanced transparency. However, P-Notes still play a significant role in attracting foreign investment to the Indian stock market.
- Conclusion: Participatory Notes provide a convenient route for overseas investors to participate in the Indian stock market without direct registration. While they have faced criticism in the past, SEBI has taken steps to address concerns and ensure transparency in P-Note transactions.