Module: General Practice
Q169: With reference to Commercial Papers (CPs) as a source of short-term financing, consider the following statements as per current RBI Directions (2025-26):
The minimum denomination for issuance of a CP is ₹5 Lakh.
CPs can be issued for a maturity period between 7 days and 1 year.
SMEs cannot issue CPs directly; they must always be guaranteed by a Scheduled Commercial Bank.
Which of the statements given above are correct?
CPs can be issued for a maturity period between 7 days and 1 year.
SMEs cannot issue CPs directly; they must always be guaranteed by a Scheduled Commercial Bank.
Which of the statements given above are correct?
✅ Correct Answer: A
Statement 1 is correct; the minimum denomination for a Commercial Paper is ₹5 Lakh and multiples thereof.
Statement 2 is correct; the maturity period is minimum 7 days and maximum 1 year.
Statement 3 is incorrect; Corporates (including eligible SMEs), NBFCs, and other entities can issue CPs directly if they meet the eligibility criteria (e.g., Net Worth of ₹100 Crore or more, Credit Rating of A3 or higher). A bank guarantee is not mandatory for all issuances.
Statement 2 is correct; the maturity period is minimum 7 days and maximum 1 year.
Statement 3 is incorrect; Corporates (including eligible SMEs), NBFCs, and other entities can issue CPs directly if they meet the eligibility criteria (e.g., Net Worth of ₹100 Crore or more, Credit Rating of A3 or higher). A bank guarantee is not mandatory for all issuances.