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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.

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.

issuer shall have the issue of Commercial Paper underwritten or co-accepted.

Issuer:

The issuer of CP shall -

• Appoint an IPA for issuance of a CP.
• Comply with all relevant requirements under RBI directions and furnish a declaration in this regard to the IPA.
• Ensure that the proceeds from CP issues are for declared end uses.
• Furnish the board resolution authorizing the company to borrow through issuance of a CP to the IPA.
• Keep the bank(s) from whom it has outstanding fund or non-fund based credit facility(ies) informed of its market borrowings, including through CPs, latest by the end of the month in which a CP was issued.
• Arrange for crediting the CP to the demat account of the investor with the depository through the IPA within 7 days of issue.
• Route all subscriptions/redemptions/buybacks/payments and default details through the IPA.
• Make disclosures in the offer document as stipulated in RBI directions.
• Submit a certificate from the CEO/CFO to the concerned IPAs on quarterly basis that CP proceeds are used for disclosed purposes, and certifying adherence to other conditions of the offer document and the CP directions. The certificate may be provided within 15 days from the close of the quarter.
• Inform the CRA and IPA on the same day about any default/delay in CP related payments.
• The issuer who has defaulted on a CP shall not be allowed to access the CP market for six months from the date of repayment of the defaulted obligation.

IPA:

The IPA for a CP issuance shall

• Ensure that the borrower is appropriately authorised to borrow through CPs.
• Verify all information disclosed in the offer document before issuance.
• Verify all documents submitted by the issuer and ensure that they are in order and issue a certificate to this effect.
• Make available the IPA certificate in electronic form on the website of the depositories for the CPs.
• Verify and hold certified copies of original documents and/or digitally signed documents in its custody.
• Report the details of issuance of a CP or its buyback and instances of default on the F-TRAC platform, by close of business hours, of the day of issuance, buyback or default as the case may be. Until CCIL advises full operationalisation of F-TRAC, the current reporting arrangements shall continue.

Credit Rating Agency (CRA):

• A CRA must act responsibly in rating CP issuances and continuously monitor the rating assigned to an issue and disseminate rating revisions, if any, to public through its publications and on its website.
• A CRA must publicly disseminate the ratings of the CP and any subsequent change in the ratings, on the date of rating or change in rating, as the case may be.

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.