With respect to the “Commercial Paper” consider the following statements:
1. These are issued at a discount to face value.
2. It is issued in a minimum denomination of ₹5 lakh.
3. Non-residents Indians and foreigners are not permitted to invest in CPs.

Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 only
(d) 1, 2 and 3

Question

With respect to the &ldquo;Commercial Paper&rdquo; consider the following statements:
1. These are issued at a discount to face value.
2. It is issued in a minimum denomination of ₹5 lakh.
3. Non-residents Indians and foreigners are not permitted to invest in CPs.

Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 only
(d) 1, 2 and 3

ONLiNE UPSC · Accepted Answer

Statement 1 is correct: Commercial Paper (CP) is an unsecured, short-term debt instrument issued by companies to raise funds for a period typically ranging from 7 days to 1 year. It is issued at a discount to face value, and the investor receives the face value on maturity.

Statement 2 is correct: As per RBI guidelines, Commercial Papers (CPs) are issued in a minimum denomination of ₹5 lakh and in multiples thereof. This threshold ensures that CPs are largely accessible only to institutional and high-net-worth investors, reducing the risk for small retail investors.

Statement 3 is not correct: Non-residents, including NRIs and foreign investors, are permitted to invest in Commercial Papers subject to the provisions of FEMA, 1999 and the associated regulations.

Money Market Instruments

Commercial Paper

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M Question 1	⏱ 0
With respect to the “Commercial Paper” consider the following statements: 1. These are issued at a discount to face value. 2. It is issued in a minimum denomination of ₹5 lakh. 3. Non-residents Indians and foreigners are not permitted to invest in CPs. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 1 only (d) 1, 2 and 3

Money Market Instruments

Commercial Paper

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