What changed
This Master Circular consolidates all previous circulars on Commercial Paper (CP) guidelines into one document, effective July 1, 2009. It does not introduce new rules but updates and harmonizes existing instructions as of June 30, 2009.
What it means for you
Banks and lenders now have a single reference for CP issuance rules, reducing compliance confusion. The unchanged eligibility criteria (net worth Rs 4 crore, standard asset status, minimum P-2 rating) continue to govern CP market access. This consolidation simplifies audit and regulatory checks for all participants.
What you must do
- Update internal CP policy manuals to reference this Master Circular as the single source of guidelines.
- Verify that all corporate borrowers issuing CP meet the net worth, rating, and asset classification criteria before investing.
- Ensure CP investments are in dematerialised form and comply with minimum denomination (Rs 5 lakh) and maturity (7 days to 1 year) rules.
- Train treasury and credit teams on the consolidated guidelines to avoid reliance on outdated circulars.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 equivalent from ICRA, CARE, FITCH, or other RBI-specified agencies. The rating must be current at the time of issuance.
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. The maturity cannot exceed the validity period of the credit rating.
What is the minimum investment amount for a single investor in CP?
The minimum investment is Rs 5 lakh (face value). CP can be issued in denominations of Rs 5 lakh or multiples thereof.