Commercial papers

Defination of Commercial Paper (CP) 

is an unsecured money market instrument issued in the form of a promissory note.

👉👉The original tenor of a CP shall be between 7 days to 1 year.

Eligible Issuers:

👉Companies
👉Non-Banking Finance Companies (NBFCs) and
👉All India Financial Institutions (AIFI)

Subject to the condition that any fund-based facility availed of from bank or financial institutions is classified as a standard asset by all financing banks at the time of issue.

👉Other entities like
👉co-operative societies/unions,
👉government entities,
👉trusts,
👉limited liability partnerships
👉any other body corporate

having presence in India with a net worth of ₹ 100 crore or higher.


👉👉Eligible Investors:

👉All residents, and non-residents permitted to invest in CP.
👉however, no person can invest in CPs issued by related parties either in the primary or secondary market.

👉Investment by financial sector entities also allowed

👉👉CP shall be issued in the form of a promissory note and held in a dematerialized form through any of the depositories approved by and registered with SEBI.

👉A CP shall be issued in minimum denomination of ₹ 5 lakh and multiples thereof.

👉A CP shall be issued at a discount to face value.

👉No issuer shall have the issue of a CP underwritten or co-accepted.

👉Options (call/put) are not permitted on a CP.

👉👉Rating Requirement:

👉Eligible issuers, whose total CP issuance during a calendar year is ₹ 1000 crore or more, shall obtain credit rating for issuance of CPs from at least 2 CRAs registered with SEBI.

CRA:Credit Rating Agency

👉The minimum credit rating for a CP shall be ‘A3’.

👉👉Issuers, investors and Issuing and Paying Agents (IPA) shall follow the standard procedures and documentation prescribed by FIMMDA.

FIMMDA: Fixed Income Money Market and Derivatives Association of India.

👉👉Secondary market trading and settlement of CP:

👉All OTC trades in CP shall be reported within 15 minutes of the trade to the Financial Market Trade Reporting and Confirmation Platform (“F-TRAC”) of Clearcorp Dealing System (India) Ltd.

👉The settlement cycle for OTC trades in CP shall be T+0 or T+1.



👉👉Buyback of CP :

👉The buyback of a CP, in full or part, shall be at the prevailing market price.

👉The buyback offer should be extended to all investors in the CP issue.

👉The buyback offer may not be made before 30 days from the date of issue.