Current · Source: Reserve Bank of India · RBI/2013-14/105 · issued 01 Jul 2013 · ~2 min read
Quick answerRBI consolidated all CP guidelines into a single master circular. CP is an unsecured promissory note for short-term borrowing by highly rated corporates, PDs, and FIs. Key conditions: minimum net worth of Rs.4 crore, standard asset classification, and standalone issuance without mandatory bank backup.
The rule, in the simplest words
Banks and FIs can issue Commercial Paper (CP) as a standalone product without a mandatory bank backup.
CP issuers must have a minimum net worth of Rs.4 crore and a standard asset classification.
Credit enhancement is allowed with specific conditions, including a higher rating for the guarantor.
How it plays out — a real example
A credit & lending officer in Indore, Mr. Kumar, reviews the financials of a corporate borrower before issuing a Commercial Paper. He ensures the company meets the minimum net worth requirement of Rs.4 crore and has a standard asset classification. This helps him assess the credit risk and make an informed decision about the CP issuance.
What changed
This is a consolidation of existing guidelines into one master circular, not a new policy. It reiterates that CP must be issued as a standalone product and banks/FIs are not obligated to provide standby facilities. Credit enhancement is allowed with specific conditions, including a higher rating for the guarantor.
What it means for you
Banks and FIs can now refer to a single document for all CP rules, reducing compliance confusion. The standalone requirement means CP cannot be bundled with other products, limiting cross-selling opportunities. The optional nature of standby facilities gives banks more flexibility but also requires careful credit assessment for any support provided.
What you must do
Update internal CP issuance and investment policies to align with this master circular.
Ensure any credit enhancement or standby facility for CP has explicit board approval and meets prudential norms.
Verify that issuer companies have tangible net worth of at least Rs.4 crore and a standard asset classification.
Review documentation for CP issues to include proper disclosures if a non-bank guarantor is involved.
Who it affects
Corporate borrowers issuing CP, Primary dealers and all-India financial institutions, Banks and FIs providing working capital or standby facilities, Investors in CP, including mutual funds and pension funds
❓ Common questions
What is the minimum net worth required for a company to issue CP?
The company must have a tangible net worth of at least Rs.4 crore as per the latest audited balance sheet.
Can banks be forced to provide standby facilities for CP issues?
No, it is not obligatory for banks or FIs to provide standby facilities. They may do so at their discretion with board approval and subject to prudential norms.
What are the conditions for a non-bank entity to provide a guarantee for CP credit enhancement?
The issuer must meet all eligibility criteria, the guarantor must have a credit rating at least one notch higher than the issuer, and the offer document must disclose the guarantor's net worth, existing guarantees, and invocation conditions.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/105
IDMD.PCD. 04/14.01.02/2013-14
July 1, 2013
All market participants
Dear Sir/Madam,
Master Circular - Guidelines for Issue of Commercial Paper
Commercial Paper (CP), an unsecured money market instrument issued in the form of a promissory note, was introduced in India in 1990 with a view to enable highly rated corporate borrowers to diversify their sources of short-term borrowings and provide an additional instrument to the investors.
2. A Master Circular incorporating all the existing guidelines/instructions/ directives on the subject has been prepared for reference of the market participants and others concerned. It may be noted that this Master Circular consolidates all the instructions/guidelines/notifications contained in the circulars listed in the Appendix in so far as they relate to guidelines for issue of CP. This Master Circular has been placed on RBI website at www.mastercirculars.rbi.org.in.
Yours faithfully
(K. K. Vohra)
Pr. Chief General Manager
Encl.: As above
Table of Content
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/105 · issued 01 Jul 2013. The plain-English explanation above is BankPulse’s own independent summary.
Verify that issuer companies have tangible net worth of at least Rs.4 crore and a standard asset classification.
📜 Compliance
Update internal CP issuance and investment policies to align with this master circular.
Ensure any credit enhancement or standby facility for CP has explicit board approval and meets prudential norms.
Review documentation for CP issues to include proper disclosures if a non-bank guarantor is involved.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (Corporate borrowers issuing CP, Primary dealers and all-India financial institutions, Banks and FIs providing working capital or standby facilities, Investors in CP, including mutual funds and pension funds), your first concrete step on “Master Circular on Commercial Paper Guidelines” is: “Update internal CP issuance and investment policies to align with this master circular.” (RBI issued this 01 Jul 2013).
Circular: RBI/2013-14/105 -- Master Circular on Commercial Paper Guidelines
Issued: 01 Jul 2013
Action required: Update internal CP issuance and investment policies to align with this master circular.
Action required: Ensure any credit enhancement or standby facility for CP has explicit board approval and meets prudential norms.
Action required: Verify that issuer companies have tangible net worth of at least Rs.4 crore and a standard asset classification.
Action required: Review documentation for CP issues to include proper disclosures if a non-bank guarantor is involved.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8188&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.