Commercial Papers are short term borrowings by Corporates, FIs, PDs, from Money Market.

Key features of CP

Commercial Papers when issued in Physical Form are negotiable by endorsement and delivery and hence highly flexible instruments

CP is issued subject to minimum of Rs 5 lakhs and in the multiples of Rs. 5 Lac thereafter,

It has a maturity ranging from 15 days to 1 year

Unsecured and backed by credit of the issuing company

Can be issued with or without Backstop facility of Bank / FI

Eligibility Criteria for investing in CP

Any private/public sector co. wishing to raise money through the CP market has to meet the following requirements:

Tangible net-worth not less than Rs 4 crore - as per last audited statement

Should have Working Capital limit sanctioned by a bank / FI

Credit Rating not lower than P2 or its equivalent - by Credit Rating Agency approved by Reserve Bank of India.

Board resolution authorizing company to issue CPs

PD and AIFIs can also issue Commercial Papers

Commercial Papers can be issued in both physical and demat form. When issued in the physical form Commercial Papers are issued in the form of a Promissory Note. Commercial Papers are issued in the form of discount to the face value.

Commercial Papers are short-term unsecured borrowings by reputed companies that are financially strong and carry a high credit rating. These are sold directly by the issuers to the investors or else placed by borrowers through agents / brokers etc.