Page 27 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes (b) Rating Requirement: All eligible participants shall obtain the credit rating for issuance
of Commercial Paper from either the Credit Rating Information Services of India
Ltd. (CRISIL) or the Investment Information and Credit Rating Agency of India Ltd.
(ICRA) or the Credit Analysis and Research Ltd. (CARE) or the FITCH Ratings India
Pvt. Ltd. or such other credit rating agencies as may be specified by the Reserve Bank
of India from time to time, for the purpose. The minimum credit rating shall be P-2
of CRISIL or such equivalent rating by other agencies. The issuers shall ensure at the
time of issuance of CP that the rating so obtained is current and has not fallen due for
review.
(c) Maturity: CP can be issued for maturities between a minimum of 7 days and a
maximum up to one year from the date of issue. The maturity date of the CP should
not go beyond the date up to which the credit rating of the issuer is valid.
(d) Denominations: CP can be issued in denominations of 5 lakhs or multiples thereof.
Amount invested by a single investor should not be less than 5 lakhs (face value).
(e) Limits and the Amount of Issue of CP: CP can be issued as a "stand alone" product. The
aggregate amount of CP from an issuer shall be within the limit as approved by its
Board of Directors or the quantum indicated by the Credit Rating Agency for the
specified rating, whichever is lower. Banks and FIs will, however, have the flexibility
to fix working capital limits duly taking into account the resource pattern of
companies' financing including CPs.

An FI can issue CP within the overall umbrella limit fixed by the RBI, i.e., issue of CP
together with other instruments, viz., term money borrowings, term deposits,
certificates of deposit and inter-corporate deposits should not exceed 100 per cent of
its net owned funds, as per the latest audited balance sheet.
The total amount of CP proposed to be issued should be raised within a period of
two weeks from the date on which the issuer opens the issue for subscription. CP
may be issued on a single date or in parts on different dates provided that in the
lattercase, each CP shall have the same maturity date.
Every issue of CP, including renewal, should be treated as a fresh issue.
(f) Who can Act as Issuing and Paying Agent (IPA): Only a scheduled bank can act as an IPA
for issuance of CP.
(g) Investment in CP: CP may be issued to and held by individuals, banking companies,
other corporate bodies registered or incorporated in India and unincorporated bodies,
Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs). However,
investment by FIIs would be within the limits set for their investments by Securities
and Exchange Board of India (SEBI).
(h) Mode of Issuance: CP can be issued either in the form of a promissory note (Schedule
I) or in a dematerialised form through any of the depositories approved by and
registered with SEBI.
CP will be issued at a discount to face value as may be determined by the issuer.

No issuer shall have the issue of CP underwritten or co-accepted.
(i) Procedure for Issuance: Every issuer must appoint an IPA for issuance of CP. The
issuer should disclose to the potential investors its financial position as per the
standard market practice. After the exchange of deal confirmation between the
investor and the issuer, issuing company shall issue physical certificates to the
investor or arrange for crediting the CP to the investor's account with a depository.

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