Final answer:
The main differences between P-notes and commercial bills of exchange are that P-notes are instruments for foreign investors to invest in Indian securities indirectly, while commercial bills are promissory notes issued by companies to manage short-term financing.
Step-by-step explanation:
The main differences between P-notes and commercial bills of exchange are their purposes, issuers, and users. P-notes, or Participatory Notes, are financial instruments used by foreign investors to invest in Indian securities without registering with the local authorities. They are issued by registered foreign institutional investors to overseas investors and represent an underlying Indian security, providing a way for foreign investors to gain exposure to Indian markets.
Commercial bills of exchange, on the other hand, are short-term financial instruments issued by companies to finance their immediate monetary requirements. They are essentially promissory notes that require the borrower to pay a specified sum at a future date. Traditionally used in trade, they are a form of credit where the seller extends terms to the buyer.
Thus, while P-notes are investment vehicles for foreign securities markets, commercial bills are tools for companies to manage their short-term liquidity needs.