What changed
The minimum maturity period for commercial paper was reduced from 15 days to 7 days, effective immediately. Additionally, issuing and paying agents are now required to report CP issuances on the NDS platform by end of day, with the start date to be finalized later.
What it means for you
Banks and lenders can now issue CP for as short as 7 days, enabling finer tuning of short-term liquidity management. Investors get a new avenue for deploying surplus funds in high-quality paper with very short tenors. The move aims to deepen the CP market and improve transparency through NDS reporting.
What you must do
- Update your CP issuance policies to reflect the new 7-day minimum maturity.
- Ensure your IPA team is ready to report CP issuances on NDS by end of day once the start date is announced.
- Review your short-term funding strategy to leverage the shorter CP tenors for liquidity management.
- Communicate the change to your treasury and risk management teams for operational alignment.
Who it affects
Scheduled banks issuing or investing in CP, Primary dealers, All-India financial institutions, Issuing and paying agents (IPAs)
What is the new minimum maturity for CP?
The minimum maturity has been reduced from 15 days to 7 days, effective October 26, 2004.
Do I need to report CP issuances differently now?
Yes, IPAs must report CP issuances on the NDS platform by end of day. The exact start date for this reporting will be announced later.
Does the maximum maturity of one year change?
No, the maximum maturity remains up to one year from the date of issue, as long as it does not exceed the validity of the issuer's credit rating.