2. What is Commercial Paper (CP)?
It is a short term money market instrument, is issued at a discount (at a reduced amount) and redeemed at the face value at maturity. It is issued in the form of promissory note or in a dematerialised form. Big Corporate, primary dealers and the all India financial institution are eligible to issue CP. The maturity period of each commercial paper is SEVEN days to ONE year from the date of issue .CP can be issued denominations of Rs. 5lakh or multiples thereof. Only a schedule bank can act as an issuing and paying agent (IPA) for issuance of CP.
