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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

In its first Bi-monthly Policy Review for FY17, RBI reduced policy Repo Rate by 25 bps to 6.50%.

Overhauling the liquidity framework, the LAF corridor has been narrowed to +/- 50 bps from +/- 100 bps. Accordingly, the Reverse Repo and Marginal Standing Facility rates stand revised at 6% and 7% respectively.

CRR was unchanged at 4% of NDTL, though the minimum daily maintenance of CRR has been reduced to 90% of the requirement from 95%.

Moreover, the Policy expressed intent to progressively move the system from liquidity deficit of 1% of NDTL to a position closer to neutrality.

Going forward, with expectations of modest deceleration in inflation, RBI projects CPI inflation for Mar-17 at 5%, while growth forecasts have been retained at 7.6% for FY17.

On the forward guidance front, RBI reiterated its ‘accommodative’ stance with incoming developments on monsoons, inflation and transmission of policy action serving as pre-requisites for further monetary easing.