Summary of Guidelines for Issue of
Commercial Paper (CP)
Eligibility: Corporates, primary dealers (PDs), satellite dealers (SDs), and all-India financial institutions (FIs) ; for a corporate to be eligible, (a) the tangible net worth of Rs.4 crore; (b) having a sanctioned working capital limit from a bank/FI; and (c) the borrowal account is a Standard Asset.
Rating Requirement: The minimum credit rating shall be P-2 of CRISIL or such equivalent rating by other approved agencies.
Maturity: A minimum of 15 days and a maximum upto one year.
Denomination: Minimum of Rs.5 lakh and multiples thereof.
Limits and Amount : CP can be issued as a "stand alone" product. Banks and FIs will have the flexibility to fix working capital limits duly taking into account the resource pattern of companies' financing including CPs.
Issuing and Paying Agent (IPA): Only a scheduled bank can act as an IPA.
Investment in CP: CP may be held by individuals, banks, corporates, unincorporated bodies, NRIs and FIIs.
Mode of Issuance : CP can be issued as a promissory note or in a dematerialised form. Underwriting, not permitted.
Preference for Demat : Issuers and subscribers are encouraged to prefer exclusive reliance on demat form. Banks, FIs, PDs and SDs are advised to invest only in demat form as soon as arrangements are put in place.
Stand-by Facility : It is not obligatory for banks/FIs to provide
stand-by facility. They have the flexibility to provide credit enhancement facility within the prudential norms.
Role and Responsibilities : The Guidelines prescribe role and responsibilities for issuer, IPA and Credit Rating Agency. FIMMDA as an SRO may prescribe standardised procedure and documentation in consonance with the international best practices. Till then, the procedures/documentations prescribed by the IBA should be followed.
The Statement on Mid-Term Review of Monetary and Credit Policy consists of three parts:
I. Mid-Term Review of Macro-economic and Monetary Developments in 2000-01;
II. Stance of Monetary Policy for the second half of 2000-01;
III. Financial Sector Reforms and Monetary Policy Measures.
Click here to read AnnexureII for:
Summary of Guidelines on Categorisation
& Valuation of Banks'Investments
Click here to read AnnexureIII for:
Guidelines on Bank Financing of Equities and Investments in Shares