Commercial Paper

What is Commercial Paper (CP)? And when & why it was introduced?
Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note.
When was it introduced?
It was introduced in India in 1990.
When was it introduced?
It was introduced in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors. Subsequently, primary dealers and all-India financial institutions were also permitted to issue CP to enable them to meet their short-term funding requirements for their operations.
Who can issue CP?
Corporates, primary dealers (PDs) and the All-India Financial Institutions (FIs) are eligible to issue CP.
Whether all the corporates would automatically be eligible to issue CP?
No. A corporate would be eligible to issue CP provided –
- the tangible net worth of the company, as per the latest audited balance sheet, is not less than Rs. 4 crores.
- company has been sanctioned working capital limit by bank/s or all-India financial institution/s; and
- the borrowal account of the company is classified as a Standard Asset by the financing bank/s/ institution/s.

The Institute of Chartered Accountants of India (ICAI) is a statutory body established by an Act of Parliament, viz. The Chartered Accountants Act, 1949 (Act No. XXXVIII of 1949) for regulating the profession of Chartered Accountancy in the country. The Institute, functions under the administrative control of the Ministry of Corporate Affairs, Government of India. The ICAI is the second largest professional body of Chartered Accountants in the world, with a strong tradition of service to the Indian economy in the public interest.

The affairs of the ICAI are managed by a Council in accordance with the provisions of the Chartered Accountants Act, 1949 and the Chartered Accountants Regulations, 1988. The Council constitutes of 40 members of whom 32 are elected by the Chartered Accountants and the remaining 8 are nominated by the Central Government generally representing the Comptroller and Auditor General of India, Securities and Exchange Board of India, Ministry of Corporate Affairs, Ministry of Finance, and other stakeholders.

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