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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 30 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.
 
 
 

Latest News

In its Fifth Bi-Monthly
In its Fifth Bi-Monthly Monetary Policy for FY19, the MPC-panel maintained ‘status quo’. Consequently, key policy rates remained unchanged - Repo rate at 6.50%, Reverse repo at 6.25% and MSF at 6.75%.
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Inflation projections for
Inflation projections for 2018-19 were revised downwards as food inflation has remained benign. It is projected at 2.7%-3.2%% in H2 FY19 (3.8%-4.5% previously) and 3.8%-4.2% in H1 FY20.
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Growth for FY19
Growth for FY19 is projected at 7.4% with 7.2%-7.3% in H2 FY19 (7.3%-7.4% previously). Growth in H1 FY20 is projected to stand at 7.5%.
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RBI in its February policy
RBI in its February policy cut the repo rate by 25 bps while also changing the stance to ‘neutral’ from ‘calibrated tightening’. Consequently, key policy rates are pegged as follows - Repo rate at 6.25%, Reverse Repo at 6.00% and Marginal Standing Facility (MSF) at 6.50%
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The inflation projections
The inflation projections have been revised downwards to 2.8% in Q4 FY19 (from 2.7-3.2% earlier), 3.2-3.4% in H1 FY20 (from 3.8-4.2% earlier) and 3.9% in Q3 FY20
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GDP growth for FY20
GDP growth for FY20 has been projected at 7.4% - in the range of 7.2-7.4% in H1 (from 7.5% earlier) and 7.5% in Q3.
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Spurring a positive surprise
Spurring a positive surprise, Jan CPI stood significantly lower than market expectations at 2.05% vis-à-vis the revised Dec-18 estimate of 2.11% (2.19% previously). Lack of inflationary pressures in the services components led core CPI to also moderate, clocking in at 5.38%, a sharp fall from 5.68% in Dec-18.
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Industrial production rose
Industrial production rose by 2.4% in Jan-19 as compared to 0.3% in Feb-18. Cumulatively, IIP for FY19 stood at 4.6%, lower than 3.7% in FY18. Significant sequential uptick was observed across sectors; Mining (3.4%), Electricity (2.1%) and Manufacturing (6.8%)
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Wholesale inflation for Jan-19
Wholesale inflation for Jan-19 came in at 2.76%, lower than 3.80% registered in Dec-18. Broad-based fall in commodity prices amid deflationary pressures from food and fuel items led to this downtick in inflation. Consequently, core WPI inched down to 2.91%, as compared to 4.22% in Dec-18.
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