Commercial Paper: UPSC Daily Important Topic | 13 December 2022

January 13, 2022

Commercial Paper

• Commercial paper is an unsecured, short period debt tool issued by a company, usually for the finance and inventories and temporary liabilities.

• The maturities in this paper do not last longer than 270 days.

• These papers are like a promissory note allotted at a huge cost and exchangeable between the All-India Financial Institutions (FIs) and Primary Dealers (PDs).

• Most of the commercial paper investors are from the banking sector, individuals, corporate and incorporated companies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs), etc.

• However, FII can only invest according to the limit outlined by the Securities and Exchange Board of India (SEBI).