Commercial Paper (CP) is a money market instrument in India, which was first introduced in 1990 to enable the highly rated corporates to diversify their resources for short term fund requirements. They are issued either in the form of a promissory note or in a dematerialised form through any of the depositories approved by and registered with SEBI.
Corporate, Primary Dealers and All India Financial Institutions are eligible to issue Commercial Paper. To be eligible to issue Commercial Paper, the Corporate’s minimum net worth must be Rs. 4 Crore. The company must have been sanctioned working capital limit by banks or all-India financial institutions. The company must obtain the credit rating for issuance of Commercial Paper either from Credit Rating Information Services of India Ltd. (CRISIL) or the Investment Information and Credit Rating Agency of India Ltd. (ICRA) or the Credit Analysis and Research Ltd. (CARE) or the FITCH Ratings India Pvt. Ltd. or such other credit rating agency (CRA) as may be specified by the Reserve Bank of India from time to time, for the purpose.
Individuals, banking companies, other corporate bodies and unincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) etc. can invest in CPs.