Friday, July 13, 2012

RBI: Guidelines for issue of Commercial Papers

  • Eligible issuers of Commercial Papers: Corporates, Primary dealers & All India Financial institutions. A Corporate would be eligible only if:
  • Tangible net worth > 4 crores;
  • It has been sanctioned working capital limit by banks or FIs;
  • & classification of borrowal a/c should be Standard Asset.
  • Rating Requirement: All eligible participants shall obtain a minimum credit rating of 'A2'  from the agencies as specified by the RBI.
  • Maturity: Minimum of 7 days & maximum of up to 1 year.
  • Denominations should be of Rs.5 lakhs or multiples. Single investment should not be less than 5 lakhs.
  • Limits & amount of CP: Aggregate amount = (Limit approved by BOD or quantum indicated by CRA, whichever is lower)
  • Investment in CP: Individuals, banking companies, other body corporate, NRIs & FIIs (should be within limit).
  • Procedure of issuance:
  • Every issuer must appoint an IPA for issuance of CP.
  • The issuer should disclose to the potential investors its financial position
  • After the deal confirmation, physical certificates will be issued to the investor or shall be credited to the investor's account with a depository.


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