EVERYTHING YOU WANT TO KNOW ABOUT COMMERCIAL PAPER....

 INDIA is a country of 130 crore people and maximum are from middle class family. So we always looks for some extra money to earn and to live our life happily. And one of the proven way to have good amount of money in hand when we should invest our money in financial securities. One of the instrument for investment is COMMERCIAL PAPER. Lets check out  some of the important points before investing in it..




         
  •   WHAT IS IT:  Commercial Paper also known as CP is a short term debt instrument issued by the companies to raise funds generally for a time period of one year..    
  •   ISSUING AUTHORITY:  Mainly issued by the large banks or the corporation to meet their short term borrowings..
  •  MINIMUM INVESTMENT: 5 Lakh or multiple of it..
  •  MATURITY PERIOD:  15 Days to 1 Year
  •   RATING : As no collateral has been attached with it so the company with high credit rating shall have the right to issue Commercial Paper and the ratings should be given by the top rated rating agency of the country such as ICRA, CARE, CRISIL.. 
  •   WHO CAN INVEST: Individual, Banking Companies, other corporate bodies, NRIs, FIIs. Though FII should invest in it but they should follow the limit set by SEBI..
  •   REQUIREMENT OF DEMAT ACCOUNT: No it is not mandatory to have demat account as C.P. can be held in either in  promissory note or in dematerialised form. For dematerialised form, one should definitely have a demat account under his/her name. FII should hold it in their DEMAT account..
  •   TRADING IN SECONDARY MARKET: Yes, Commercial paper has been actively traded in OTC( over the counter) market. Those transaction should be immediately reported to FIMMDA reporting platform within 15min of trade for widely spreading of information to the market participation..
  •   REDEMPTION MODE: If it is held in Demat version then the holder of the Commercial Paper should redeem it from the depository and receive payment from IPA. But if it is held in physical form then the holder shall present the instrument for payment to the issuer through the IPA..
These are some of the important points every investors should consider before investing in the Commercial Paper. It is fairly low risk instrument because of the extremely short term nature but the investors should also remember that it is totally different from bank deposit, so invest wisely..

THANK YOU  and  HAPPY INVESTING..
Location: Kolkata, West Bengal, India

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