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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 7 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. We endeavor to provide the best possible returns to our clients, keeping in line with their overall investment objectives.
 
 
 

Latest News


May CPI jumped to 5.76% from an upwardly revised estimate of 5.47% for Apr-16. Such gains in inflation levels were primarily on account of sharp spike in food prices.
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In line with expectations, RBI maintained ‘status quo’ on policy rates in its Second Bi-Monthly Policy Review of FY17. CRR and SLR were held unchanged at 4% and 21.25% respectively.
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GVA growth projections for the current fiscal were retained at 7.6%.
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The regulator flagged hawkishness on inflation suggesting that Mar-17 CPI is likely to inch upwards of the intended target of 5%.
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On the forward guidance front, the stance remained ‘accommodative’ with incoming macroeconomic and financial developments defining the finer contours of future policy decisions. Until then, focus remains on improving transmission of previous rate cuts to aid growth.
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