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What is Commercial Paper ?

Commercial Papers : A Commercial Paper is a short term security (7 days to 365 days) issued by a corporate entity (other than a bank), at a discount to the face value.

b) Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note.

c) Commercial Paper normally give a higher return than fixed deposits & CDs.

d) Commercial Paper can be issued in denominations of Rs. 5 lakh or multiples thereof. Amount invested by a single investor should not be less than Rs. 5 lakh (face value).

e) Only corporates who get an investment grade rating can issue Commercial Papers, as per RBI rules. It is issued at a discount to face value.

f) Bank and FI’s are prohibited from issuance and underwriting of Commercial Paper.

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