Commercial Paper (CP)
Why in news?
- Aditya Birla Finance became the first company to list its commercial papers borrowing of Rs 100 crore on the bourses.
Commercial Paper (CP):
- A Commercial Paper (CP) is an unsecured loan raised by firms in money markets through instruments issued in the form of a promissory note.
- It was introduced in India in 1990.
Denominations and Maturity of Commercial Paper:
- CPs can be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue.
- CPs can be issued in denominations of Rs 5 lakh or multiples thereof.
Who can issue CP?
- Corporates, primary dealers (PDs) and the All-India Financial Institutions (FIs) are eligible to issue CP.
Issuing and Paying Agent (IPA):
- Only a scheduled bank can act as an IPA for issuance of CP.
Who can invest in commercial paper?
- Individuals, banking companies, other corporate bodies (registered or incorporated in India) and unincorporated bodies, non-resident Indians (NRIs) and foreign institutional investors (FIIs), etc can invest in CPs.
- Investment by FIIs would be within the limits set for them by Securities and Exchange Board of India (SEBI) from time-to-time.