What changed
RBI released a new Master Direction (2024) that consolidates and replaces the 2010 CP notification, Section IV of the 2016 Master Direction, and the 2017 direction. The update follows a comprehensive review announced in June 2019 and market feedback from December 2020. The new rules take effect from April 1, 2024.
What it means for you
Banks and lenders dealing in CPs and short-term NCDs must align their processes with the updated framework by the effective date. The consolidated direction reduces regulatory fragmentation, making compliance simpler. It also signals RBI's intent to keep money market instruments well-regulated and responsive to market needs.
What you must do
- Review the full Master Direction text to identify any changes in eligibility, issuance, or reporting requirements.
- Update internal policies and operational procedures for CP and NCD (up to 1 year) to comply by April 1, 2024.
- Train relevant treasury and compliance teams on the new consolidated framework.
- Ensure all outstanding CP/NCD programs are aligned with the new definitions and scope.
Who it affects
All eligible market participants issuing or dealing in Commercial Paper, Issuers and investors in Non-Convertible Debentures with original maturity up to one year, Banks (including Payment Banks, Small Finance Banks, RRBs, cooperative banks), All India Financial Institutions (EXIM Bank, NABARD, NHB, SIDBI, NaBFID), Companies and body corporates accessing short-term money markets
When does the new Master Direction take effect?
The Direction comes into force from April 1, 2024.
Does this Direction apply to all types of banks?
Yes, it applies to all banks as defined in the Banking Regulation Act, including Payment Banks, Small Finance Banks, regional rural banks, and cooperative banks.
What instruments are covered under this Direction?
It covers Commercial Paper (unsecured promissory notes) and Non-Convertible Debentures with original or initial maturity up to one year.