The Reserve Bank of India today placed the status paper on Commercial Paper (CP) Market in India on its website. Inviting comments on the Report by August 14, 2004, it has stated that they may be forwarded to Principal Monetary Policy Adviser, Monetary Policy Department, Reserve Bank of India, Central Office, Shahid Bhagat Singh Marg, Mumbai 400 001 [Fax: (91-22) 2265 1685/2269 3204].

CPs are negotiable short-term unsecured promissory notes with fixed maturities, issued by well rated companies generally sold on discount basis and mature at par. For many large, creditworthy issuers, CP is a low-cost alternative to bank loans from a large pool of institutional buyers. Investors in CP earn competitive, market-determined yields whose maturity and amounts can be tailored to their specific needs.

The guidelines of CP had been reviewed from time to time but major changes were effected last in October 2000. Since then, the market participants have been suggesting various modifications in the guidelines for further deepening of the CP market. In this context, an attempt has been made here to review the status of development of CP market in a cross-country perspective and suggest measures for further developing this market.

The status paper on CP Market in India was placed in the nineteenth meeting of the Technical Advisory Committee (TAC) on Money, Foreign Exchange and Government Securities Markets on May 31, 2004 with Dr. Rakesh Mohan, Deputy Governor in the Chair. In the meeting, various issues affecting the further development of the CP market and suggestions given by Monetary Policy Department were discussed.