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Fincash » Commercial Paper

Commercial Paper

Updated on December 2, 2019 , 578 views

What is Commercial Paper?

Commercial papers are usually known as promissory notes which are unsecured and are generally issued by companies and financial institutions, at a discounted rate from their Face Value. The fixed maturity for commercial papers is 1 to 270 days. The purposes for which they are issued are - for inventory financing, accounts receivables, and settling short-term liabilities or loans. Commercial paper was first issued in the year 1990 in India as a short-term instrument.

CP

Issuing Commercial Paper

Commercial paper can be issued into the market by the following members:

  • Manufacturing Companies
  • Leasing and Finance Companies
  • Financial Institutions

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Commercial Paper Tenure

  • The maturity is a minimum of seven days and a maximum of one year from the date of issue
  • The denomination for issuing commercial paper must be INR 5 lakhs and its multiples
  • A single investor should not invest an amount more than INR 5 lakh
  • Commercial paper should not be provided if the credit rating is beyond the date of its validity
Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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