Scribd Logo
Upload

Welcome to Scribd!

  • 185 views

    Commercial Paper - Ashith

    Uploaded by

    rathnakotari
    Commercial paper is a short-term unsecured promissory note issued by corporations to raise funds. In India, the RBI regulates CP and allows companies with a tangible net worth over Rs. 4 crore to issue CP with maturities between 7 days to 1 year. CP provides returns higher than bonds but carries more risk since they are unsecured. Only high rated companies can issue CP to raise short term funds as an alternative to bank loans.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd

    Commercial Paper - Ashith

    Uploaded by

    rathnakotari
    185 views10 pages
    Commercial paper is a short-term unsecured promissory note issued by corporations to raise funds. In India, the RBI regulates CP and allows companies with a tangible net worth over Rs. 4 crore to issue CP with maturities between 7 days to 1 year. CP provides returns higher than bonds but carries more risk since they are unsecured. Only high rated companies can issue CP to raise short term funds as an alternative to bank loans.

    Original Description:

    mba commercial paper

    Original Title

    Commercial Paper -Ashith

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Commercial paper is a short-term unsecured promissory note issued by corporations to raise funds. In India, the RBI regulates CP and allows companies with a tangible net worth over Rs. 4 crore to issue CP with maturities between 7 days to 1 year. CP provides returns higher than bonds but carries more risk since they are unsecured. Only high rated companies can issue CP to raise short term funds as an alternative to bank loans.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    185 views10 pages

    Commercial Paper - Ashith

    Uploaded by

    rathnakotari
    Commercial paper is a short-term unsecured promissory note issued by corporations to raise funds. In India, the RBI regulates CP and allows companies with a tangible net worth over Rs. 4 crore to issue CP with maturities between 7 days to 1 year. CP provides returns higher than bonds but carries more risk since they are unsecured. Only high rated companies can issue CP to raise short term funds as an alternative to bank loans.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 10

    COMMERCIAL PAPER MARKET

    Presented By: ASHITH M RODRIGUES

    Presentation on

    Contents
    Meaning Commercial Paper in India Guidelines for issue of CP Invest in CP Advantages & Disadvantages Eligibility Conditions

    MEANING

    Commercial paper is an unsecured money market instrument issued in the form of a promissory note,with a fixed maturity by a company approved by RBI.

    FEATURES
    It is a certificate evidencing an unsecured debt of short term maturity. Usually sold at a discount from face value. Carries Higher interest repayment rates than Bonds. The longer the maturity on a note ,the higher the interest rate the issuing institution must pay. Interest rates fluctuate with market conditions, but are lower than Bank rates.

    CP IN INDIA
    Introduced in India in 1990 to enable high rated corporate borrowers to raise short term Funds. Later on other players like All India Financial Institutions and Primary Dealers too were allowed to issue CP for meeting their short term funding requirements. In India it is expected that CP will be used only for short term financing and as an alternative source of finance to bank credit and other short term finances.

    RBI GUIDELINES FOR ISSUE OF CP


    In India the issue of CP is being regulated by RBI. The tangible net worth of the company ,as per the latest audited balance sheet ,is not less than Rs.4 crore. CP can be issued for maturities between 7 days and up to 1 year from the date of issue. CP can be issued in denomination of Rs.5 lakh or multiples thereof. Amount invested by single investor should not be less than Rs.5Lakh. The total amount of CP proposed to be issued should be raised within a period of 2 weeks from the date on which the issuer opens the issue for subscription.

    Invest in CP
    1) Individuals 2) Banking Companies 3) Other corporate bodies & unincorporated bodies 4) Non-Resident Indians 5) Foreign Institutional Investors

    ADVANTAGES & DISADVANTAGES


    ADVANTAGES High returns Simplicity Flexibility

    DISADVANTAGES It is an impersonal method of Financing Its usage is limited only to Blue chip companies. Issuances of CP bring down the bank credit limits. Stand-by credit may become necessary. It cannot be redeemed until maturity.

    Eligibility Conditions
    Following can issue: 1. Corporates 2. Primary Dealers 3. All India Financial Institutions. A Corporate is allowed to issue CP provided: a) The tangible net worth of the company, as per the latest audited balance sheet, is not less than Rs.4 crore. b) Company has been Sanctioned working capital limit by banks. c) The borrower account of the company is classified as standard Asset by Financing Banks.

    You might also like

    pFad - Phonifier reborn

    Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

    Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


    Alternative Proxies:

    Alternative Proxy

    pFad Proxy

    pFad v3 Proxy

    pFad v4 Proxy