New Delhi: Investments in domestic capital markets through participatory notes fell to a four-month low of Rs 1.68 lakh crore at the end of April amid stringent norms put in place by Sebi to curb the inflow of illicit funds.


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P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be a part of the Indian stock markets without registering themselves directly. They, however, need to go through a proper due diligence process.


According to Sebi, the total value of P-note investments in Indian markets equity, debt and derivatives ? declined to Rs 1,68,545 crore at April-end, from Rs 1,78,437 crore at the end of March.


This was the lowest level of investment through the route since December, when the cumulative value of such investment stood at Rs 1.57 lakh crore.


At the end of February, the total investment value through P-notes was at Rs 1.70 lakh crore and Rs 1.75 lakh crore in January.


Of the total, P-note holdings in equities were at Rs 1.09 lakh crore at April-end and the remaining were in debt and derivatives markets.


The quantum of FPI investments via P-notes plunged to 6 per cent at the end of last month from 6.6 per cent in March.


Last month, the board of Securities and Exchange Board of India (Sebi) had tightened the norm by barring resident Indians, NRIs and entities owned by them from making investment through P-notes.


The decision was part of efforts to strengthen the regulatory framework for P-notes, which have been long seen as being possibly misused for routing of black money from abroad.


The Special Investigation Team (SIT) on black money, set up by the Supreme Court, had recommended a slew of measures, including the need for Sebi to come up with stricter regulations on P-notes.