Invest in Commercial Paper Online in a Few Clicks

1. Trusted PlatformAltifi is backed by the Northern Arc group. It is a reputable and diversified financial services provider in India, ensuring reliability and trust.
2. Wide Range of OptionsAltifi offers a diverse selection of Commercial Papers from top-tier companies. We give you access to short-term investment opportunities.
3. Secure TransactionsAltifi ensures secure and seamless transactions through multiple payment modes, to protect your investments at every step.
4. Convenient and User-FriendlyOur platform is designed to be user-friendly, making it easy to explore, invest and monitor your Commercial Papers with minimal effort.

1. Sign UpRegister on Altifi to access a user-friendly interface tailored for seamless investing.
2. Validate Your KYCComplete your KYC verification on Altifi in just four steps: provide PAN details, link your bank account, verify your Demat account and provide your e-sign.
3. ExploreDiscover a variety of investment products, including CPs from companies, with detailed information and ratings available.
4. InvestOur platform offers effortless commercial paper purchases using secure payment methods, ensuring a smooth transaction process.
5. MonitorTrack your CP investments in real-time through Altifi to keep tabs on performance and maturity dates effortlessly.

Commercial Papers (CPs) are short-term and unsecured debt instruments. They are issued by corporations, financial institutions and other entities to meet their short-term funding requirements. Commercial papers are used to finance inventory, accounts receivable and other short-term liabilities. They are typically issued at a discount on their face value. These instruments offer an alternative to bank loans, providing issuers with a cost-effective means of raising funds quickly. Commercial Papers are a convenient choice for investors seeking relatively safe, high-liquidity investment options with competitive returns.

1. Short-Term MaturityCommercial papers can have a maturity period ranging from 7 days to 1 year. This short-term nature makes them a relatively flexible choice for investors.
2. Credit RatingA vital feature of commercial papers is the mandatory credit rating requirement. Issuers must obtain a credit rating from recognised agencies such as India Ratings & Research, ICRA, CRISIL or CARE. This ensures that investors can gauge the creditworthiness of the issuer and ensure the reliability of their investment.
3. MaturityCommercial papers offer flexibility in terms of maturity, with terms ranging from 7 days to one year from the date of issue. The maturity date is aligned with the validity of the issuer's credit rating. This ensures that the instrument remains a secure short-term investment option throughout its term.
4. DenominationsCommercial papers are issued in denominations of ₹5 lakh or multiples, making them accessible to a wide range of investors. The minimum investment amount is ₹5 lakh, which allows for significant flexibility in investment size while ensuring substantial participation.

1. Safety and SecurityCommercial Papers are assessed by the Credit Rating Agencies (CRAs) to measure the risk of default. Rigorous credit rating requirements and regulatory oversight enhance investor confidence in the security of their investments.
2. LiquidityCPs are highly liquid instruments that can be easily bought and sold in the secondary market before maturity. They provide investors with flexibility to manage their cash flow needs. This liquidity ensures that investors can access their funds quickly if required.
3. Higher ReturnsCommercial Papers often offer potentially higher yields compared to other short-term instruments.
4. DiversificationInvesting in commercial papers can strengthen portfolio diversification by adding exposure to short-term debt instruments. By spreading investments across different asset classes and instruments, you can reduce concentration risk and potentially lower overall portfolio volatility.
5. Regulatory OversightThe issuance and trading of Commercial Papers are regulated by the Reserve Bank of India (RBI). Regulatory oversight helps maintain the integrity of the CP market and enhances investor confidence.

1. What are Commercial Papers in India?Commercial Paper (CP) was first introduced in India in 1990. They were issued as a promissory note as an unsecured money market instrument. It was established to help highly rated corporate borrowers diversify their short-term borrowing sources and offer investors a new financial instrument. Over time, primary dealers, satellite dealers and all-India financial institutions were also permitted to issue CPs. The guidelines for issuing CPs are governed by directives from the Reserve Bank of India (RBI).
2. Who can buy Commercial Papers in India?Any entity can invest in Commercial Papers, including individuals, corporations, financial institutions and foreign investors.
3. Who can issue Commercial Papers?

   The following entities can issue CPs:

   Corporates: Corporations are primary issuers of commercial paper. To be eligible, a corporate entity must:

   • Have a tangible net worth at least ₹4 crore, per its latest audited balance sheet.
   • Possess a sanctioned working capital limit from a bank or an all-India financial institution.
   • Ensure that its borrowal accounts are classified as Standard Assets by the financing banks or institutions.

   Primary Dealers: Primary dealers authorised by the RBI are permitted to issue commercial paper. These financial entities operate in the money market by providing liquidity and enabling the smooth functioning of the market operations.

   All-India Financial Institutions: All-India financial institutions (FIs), which have the approval to raise short-term resources under the RBI's umbrella limit, can also issue CPs. These institutions typically include FIs involved in developmental and promotional activities across various sectors of the economy.

   Satellite Dealers: Satellite dealers are also eligible to issue CPs. They support the primary dealers by participating in the distribution of government securities and other market operations.

4. Is commercial paper a loan?Commercial Paper is a short-term debt instrument issued by corporations and financial institutions to raise funds.
5. What are the key parties involved in the issuance of commercial papers?

   Issuer: The issuer of Commercial Paper (CP) must adhere to RBI guidelines. The issuer must maintain the required minimum credit rating, verify documentation and secure necessary approvals. They must follow all regulatory guidelines to ensure market integrity.

   Issuing and Paying Agent (IPA): The IPA acts as an intermediary. They ensure the issuer complies with credit rating requirements and approved limits. They verify documentation, issue compliance certificates and report CP issuance details to the RBI and other platforms for transparency.

   Credit Rating Agency (CRA): CRAs assess and assign credit ratings based on the issuer's financial strength, adhering to SEBI's Code of Conduct. They monitor issuer performance, periodically update ratings and promptly publish revisions to inform investors.

6. Is commercial paper secured or unsecured?Commercial Paper is typically unsecured, meaning it is not backed by collateral. Instead, it relies on the issuer's creditworthiness.
7. Why is a commercial paper issued?Commercial Paper is issued to meet short-term funding needs for operational expenses, inventory and accounts receivable. They offer a cost-effective alternative to traditional bank loans.
8. Is commercial paper fixed income?Commercial Paper is a fixed-income instrument because it potentially provides fixed returns to investors.
9. Is commercial paper a debenture?Commercial Paper is not a debenture. It is a promissory note issued for short-term financing.
10. How do I calculate the yield on Commercial Papers?

    The yield on Commercial Papers can be calculated using the formula:

    Yield = (Face value – Purchase Price)/ (Purchase price) x 365/no of days to maturity) X 100

    This formula provides the annualised yield based on the purchase price and maturity date.

11. What is the mode of redemption for Commercial Paper?Commercial Papers are typically redeemed at face value on the maturity date. The redemption process involves direct payment to investors through IPA.