Home : Debt Instruments at NSDL : Debt Instruments
Frequently Asked Questions(FAQ)
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 Commercial Paper, then the company need not sign a separate tripartite agreement. Company has to send a Letter of Intent for admitting its securities. Once admitted these securities would be made available for dematerialisation by NSDL.
Commercial paper can be issued in multiples of Rs. 5 lacs. The face value of the CP by default will be taken as Rs. 5 lakh in the NSDL system. The securities (CP) will be credited in the IPAs allotment account in terms of units. For eg. 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 Commercial Paper. Only, Letter of Intent submitted by the issuer is sufficient.
Each instrument will be identified separately in NSDL system through a unique code called ISIN. Description of each instrument will be communicated to all the DPs and Issuers on activation of ISIN in NSDL system.
On the receipt of Letter of Intent alongwith duly filled in Master creation Form, ISIN will be allotted by the next day.
The Company Name will be accompanied by CP (Commercial Paper) 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) Commercial Paper 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.
As per the RBI Monetary and Credit Policy 2001-02, with effect from June 30, 2001, banks, FIs, PDs and SDs will be permitted to make fresh investments and hold CP only in dematerialised form and outstanding investments in scrip form should also be converted into demat by October, 2001. In this scenario any new instrument has to be issued directly in dematerialized form to these classes of the investor. Thus a new CP can be issued directly in demat form without recourse to printing of Certificates.
Securities will be directly credited into the allotment account of the IPA by NSDL on receipt of allotment details from Issuer/Registrar & Transfer Agent. The issuance in demat form will be in accordance with the FIMMDA Guidelines on issuance of CP's (effective from 30/06/01), details of which are available on the www.fimmda.org.
Credit can be done on the same day the Issuer receives the payment. The IPA on the advice of Issuer can carry out direct credit by transferring securities from its allotment account to the investors account on the day it receives the payment. But the Issuer has to ensure that the IPA receives credit in its account atleast one day prior to the value date (the date on which the CP has be credited in the investor's account).
Yes, the Issuer has to pay the relevant stamp duty as applicable irrespective whether it is issued in either physical or demat form.
The IPA has to open a redemption account with a Depository Participant. The beneficiary holder should transfer the securities into this account before 3.00 p.m on one working day before the maturity date so as to give sufficient time for the IPA to process the papers and arrange to effect the payment on the due date of the CP. The balance in the redemption account is extinguished by carrying out debit-type corporate, which will be initiated by the Share Registrar in co-ordination with NSDL after the IPA has confirmed to NSDL about the payment to the beneficiary holders.
The IPA can use the same redemption account for redemption of all issues of commercial paper handled by it. Issuer should communicate the redemption account details to all its beneficiary holders. The IPA certificate, which the investor will receive, will contain the details of the redemption account.
NSDL on a weekly basis provides the download of beneficiary position (benpos) to all the Registrars (on every Friday - there is no need for an issuer to solicit a special benpos on a Friday). Issuers can take these details from the registrar.
In addition to this, NSDL also provides download for statutory requirements such as book closure / record date, AGM etc. In case of CP the Issuer/R & T agent will be provided beneficiary download of (T-2) day, available at the Registrar's machine on (T-1) day where T is the redemption date. These downloads are free of cost. This beneficiary position will only indicate the details of the CP holders to the Issuer as on that particular date but will no way imply that redemption amount will be paid to the above beneficiary holders. Redemption amount will be paid to the beneficiary holder who finally transfers the balances to the IPA redemption account on a day prior to the maturity date.
NSDL also provides downloads of beneficiary position as and when requested by the Issuer. For these type of download NSDL charges a flat fee of Rs 5000/- where number of records are less than 10,000 and a fee of Rs 10,000/- for records exceeding 10,000.
As per the FIMMDA guidelines, the beneficiary holder should transfer the securities before 3.00 p.m on one working day before the maturity date so as to give sufficient time for the IPA to process the papers and arrange to effect the payment on the due date of the CP. After the receipt of commercial paper in the redemption account, IPA will make payment to the beneficiary holders. Also as indicated earlier, on T-2 day (Where T is the redemption/maturity date), NSDL will provide a Benpos to the R& T agent/Issuer, which will indicate the beneficiary holders of the CP as of that date.
- As per the FIMMDA guidelines, in case of default in payment by the issuer, the IPA will intimate the beneficiary holder(s). The beneficiary holder(s) on such intimation can take following steps:
- Getting the security transferred back to its DP account from IPAs CP redemption account by requesting IPA accordingly.
- Hold the securities in his account or Rematerilise the securities as per the provisions of the Depositories Act, 1996.
Yes, A new ISIN has to be generated to identify these rolled over commercial paper separately in the NSDL system, as the date of maturity will be different.
In case of corporate action of commercial papers, a flat rate of Rs.10,000/- is levied on the Issuer for all corporate actions of Commercial Paper during a calendar year. The other cost that will have to be borne by the company (in case the Company has not already joined NSDL) is towards establishment of electronic connectivity with NSDL. Electronic connectivity can obtained either through setting up in-house connectivity or by appointing a Registrar & Transfer Agent connected with NSDL.
No. It is to be decided by the issuer.