TOPIC 13: QUICK REFERENCE TO “Commercial Paper”

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Quick Reference to " Commercial Paper " :-.
1. The Commercial Paper is a money market instrument.
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2. It is Unsecured.
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3. It is in the form of Promissory Notes.
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4. It was introduced in the year 1990 in india.
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5. It can be issued by Primary dealers, All- India financial Institutions, Corporates.
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6. The Tangible net worth of the Company as per the latest balance sheet should be minimum of ₹ 4 crore.
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7. Working capital limit should be sanctioned by Bank or All India financial Institutions.
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8. Rating Requirement is mandatory to issue CP's.
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9. It helps to meet short term funding requirement.
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10. Min maturity Period should be of 7 days and maximum maturity Period should be of 1 year.
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11. Maximum limit of amount will be Approved by BOD or Specified by Credit Rating Agency :- Whichever is lower.
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12. It should be raised within 2 weeks from opening date of issue of Subsribtion.
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13. CPs can be issued in ₹ 5 lakhs or multiples as a denominations.
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14. The renewal of CPs are also considered as Fresh issue of CPs.
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15. CPs can be in the form of Promissory Notes or In a Dematerialized form.
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16. CPs are always issued at Discount to the Face value.
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17. CPs cannot be underwritten.
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18. It is absolutely different from Convertible Note.
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19. RBI is the Regulator for CPs.
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20. Only a Scheduled bank can act as an Issuing and Paying Agent for issuance of CP.
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REGARDS
ACA SOURAV BAGARIA