To curb rollover of CPs, RBI mulls a day’s cooling period cooling period
-> Corporates may have to wait for a day to issue a new Commercial Paper (CP) after redeeming a maturing CP
-> CP — an unsecured short-term debt paper
-> Its fear is that the chain can break because of a rating downgrade of a CP leading to a cascading effect new norm will mean is that a corporate will have to first repay a ‘maturing’ CP from its internal accruals and only thereafter raise resources via a fresh CP issuance the following day
-> CPs can be issued by companies, non-banking finance companies (NBFCs), All-India Financial Institutions (AIFIs) and other entities including co-operative societies/unions, government entities, trusts, limited liability partnerships and any other body corporate having a presence in India — with a minimum net worth of Rs.100 crore.
-> CPs are issued by way of private placement at a discount to the face-value
-> They can be issued for a period of not less than seven days and up to one year, for a minimum denomination/ marketable lot of Rs.5 lakh, and multiples thereof.
Inclusion in the Second Schedule of the Reserve Bank of India Act, 1934
-> Fincare Small Finance Bank Limited
-> Kookmin Bank
