What changed
RBI issued a Master Circular that consolidates and updates all previous instructions on Commercial Paper issuance into one document. No new policy changes were introduced; this is purely a compilation of existing guidelines as of June 30, 2008.
What it means for you
Banks and lenders now have a single reference point for CP issuance rules, reducing confusion from multiple circulars. The eligibility criteria, rating requirements, and maturity norms remain unchanged, ensuring continuity for market participants. This consolidation simplifies compliance and audit processes for institutions dealing in CP.
What you must do
- Update internal policy manuals to reference this Master Circular as the sole source for CP guidelines.
- Verify that all CP issuances comply with the consolidated eligibility, rating, and maturity norms.
- Ensure CP investments are in dematerialized form where possible and adhere to the Rs.5 lakh minimum denomination.
- Train treasury and compliance teams on the consolidated guidelines to avoid reliance on outdated circulars.
Who it affects
Scheduled banks, Primary dealers, All-India financial institutions, Corporate borrowers issuing CP, Credit rating agencies
What is the minimum credit rating required for CP issuance?
The minimum rating is P-2 from CRISIL or an equivalent rating from ICRA, CARE, FITCH, or other RBI-specified agencies.
Can CP be issued for less than 7 days?
No, the minimum maturity is 7 days and the maximum is one year from the date of issue.
Who is eligible to issue CP under this Master Circular?
Corporates with tangible net worth of at least Rs.4 crore, sanctioned working capital limits, and a standard asset classification, as well as primary dealers and all-India financial institutions.