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.


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