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Commercial Paper 


 
A Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. With a view to enable highly rated corporate borrowers to diversify their sources of short-term borrowing and also provide an additional instrument to investors, RBI introduced Commercial Papers as a money market instrument in the Indian financial market in 1990.
 
Corporates and primary dealers (PDs), and all-India financial institutions (FIs) that have been permitted to raise short-term resources by Reserve Bank of India are eligible to issue CP. A corporate would be eligible to issue CP provided subject to certain conditions. All eligible issuers are required to obtain a credit rating for issuance of Commercial Paper from a credit rating agency as may be specified by the Reserve Bank of India from time to time.
 
CPs are issued at a discount to face value, as may be determined mutually by the issuer & investor. They can be issued for maturities between a minimum of 7 days and a maximum up to one year from the date of issue and can be issued in denominations of Rs.5 lakh or multiples thereof. Issuers may buyback the CP, issued by them to the investors, before maturity but not before 30 days from the date of issue.
 
CP may be issued to and held by individuals, banking companies, other corporate bodies registered or incorporated in India and unincorporated bodies and Non-Resident Indians (NRIs). Generally, mutual funds, banks, insurance companies, etc are the dominant investors in the CP market.
 
Secondary market trading takes place through the interbank broking market between institutional participants. OTC trades in CP shall be settled through NSCCL, ICCL and MSEI CCL. The settlement cycle for OTC trades in CP shall either be T+0 or T+1.
 
Clients interested buying/selling CPs may contact our Sales Personnel on 022-66202224/25/28.
 
 
 

Latest News

The CPI
The Consumer Price Index (Combined) inflation for November 2021 printed higher at 4.9% as compared to the reading of 4.5% in the previous month.
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Headline WPI inflation
Headline WPI inflation for November 2021 printed at 14.2%, significantly higher than 12.5% recorded in October 2021.
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IIP growth
IIP growth for October 2021 printed at 3.2%, marginally lower than the revised reading of 3.3% in September 2021, on a year on year basis.
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Real gross domestic product
Real gross domestic product for Q2FY22 noted a growth of 8.4% on a year on year basis, aided by strong favorable base and marginal pickup in activity across segments. Also, GDP expanded by 10.4% on a quarter on quarter basis and by 0.3% from Q2FY20 levels.
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Monetary Policy for FY22
In the Fifth Bi-monthly Monetary Policy for FY22, the MPC unanimously decided to maintain status quo on policy rates. The key policy rates stand unchanged: Repo rate at 4.00%, Reverse Repo rate at 3.35%, Marginal Standing Facility and Bank rate at 4.25%.
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