Question
Commercial Paper (CP) is an unsecured money market
instrument issued in the form of a promissory note. What is the minimum maturity period for which a Commercial Paper can be issued?Solution
Commercial Paper (CP) was introduced in India in 1990 to enable highly rated corporate borrowers to diversify their sources of short-term borrowings. CP can be issued for maturities between a minimum of 7 days and a maximum of one year from the date of issue. It can be issued in denominations of ₹5 lakh or multiples thereof, with the amount invested by a single investor not being less than ₹5 lakh (face value).
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