The company has to sign a tripartite/bipartite agreement with NSDL. If the company has admitted any of its securities in NSDL (shares, debentures, etc.) and wishes to appoint the same R & T agent for CP, then the company need not sign a separate tripartite / bipartite agreement. Company has to send a Letter of Intent (LoI) and a Master File Creation Form (MCF) for admitting its securities. Once admitted these securities would be made available for dematerialisation by NSDL.
Commercial paper can be issued in multiples of ₹ 5 lacs. The face value of the CP by default will be taken as ₹ 5 lakh in the NSDL system. The securities (CP) will be credited in the IPAs allotment account in terms of units. For e.g. If the company proposes a ₹50 crore issue, then 1000 units will be credited in the IPAs allotment account.
No. The same terms and conditions of the existing bipartite/tripartite agreement will be applicable for the CP. Only, a LoI and a MCF submitted by the issuer is sufficient.
Each instrument will be identified separately in NSDL system through a unique code called International Securities Identification Number (ISIN). Description of each instrument will be communicated to all the Depository Participants and Issuers on activation of ISIN in NSDL system.
On the receipt of LoI alongwith duly filled in MCF and requisite documents complete in all respects, an ISIN will be allotted on the same day.
The company name will be accompanied by CP alongwith date/year of maturity as a part of the standard descriptor. This will enable both Investors and the Depository Participants to easily identify these instruments. e.g. RIL 90D CP 10NV00 indicates 90 day (duration of the paper) CP issued by Reliance Industries with maturity date as November 10, 2000.
If the CP is allotted on different days say for 89 days to one investor, 88 days for another investor, the number of days in the descriptor will indicate the number of days the Issuer has provided NSDL at the time of the activation of the ISIN. Also, if the CP has been provided a backstop facility then the descriptor changes to RIL 90D CP 10NV00-BS.
A CP shall be issued in the form of a promissory note and held in dematerialized form.
Yes. The Issuer has to pay the relevant stamp duty as applicable. The stamp duty may be paid online and the Electronic - Secure Bank and Treasury Receipt (e-SBTR) may be submitted to the IPA alongwith the usance promissory note. In case the issuer is not in a position to make payment of stamp duty through e-SBTR, it can make the payment as per the manual process and submit a payment challan copy to IPA.
As per the FIMMDA guidelines, in case of default in payment by the issuer, the IPA will intimate the investors, the depositories, R&T Agents, trustee (if any) and the credit rating agencies. The holders would have recourse to the Issuer and stand-by credit provider (through trustee, if any), on the strength of default advice received from IPA.
In case of corporate action of CPs, a flat rate of ₹ 10,000/- is levied on the Issuer for 5 normal corporate actions. Additional fee of ₹10,000/- for every additional five issues.
No. It is to be agreed between the issuer and the RTA.
CP being a standalone product, it would not be obligatory in any manner on the part of banks and FIs to provide stand-by facility to the issuers of CP.
However, Banks and FIs have the flexibility to provide for a CP issue, credit enhancement by way of stand-by assistance/credit backstop facility, etc., based on their commercial judgement and as per terms prescribed by them. This will be subjected to prudential norms as applicable and subject to specific approval of their Board.
Yes. Non-bank entities including corporates can provide unconditional and irrevocable guarantee for credit enhancement for CP issue provided that the offer document for CP properly discloses the net worth of the guarantor company, the names of the companies to which the guarantor has issued similar guarantees, the extent of the guarantees offered by the guarantor company, and the conditions under which the guarantee will be invoked.
No issuer shall have the issue of Commercial Paper underwritten or co-accepted.
The issuer of CP shall -
The IPA for a CP issuance shall
Credit Rating Agency (CRA):
Yes. FIMMDA has specified the formats for letter of offer to be issued by CP issuer and IPA certificate to be issued by IPA in its Operational guidelines on CPs.