1. What is Commercial Paper?
It is a short-term debt instrument issued by the financial companies to various eligible companies which need immediate funds for their short-term liabilities. These are usually unsecured in nature and are used to collect funds from financial companies or the public.
2. Who Issues Commercial Paper?
Commercial paper is issued by banks and financial companies to keep a balance on their short-term receivables and obligations. In India, Primary Dealers (PD) and All-India Financial Institutions (FIs) primarily issue this paper.
3. How to Buy Commercial Paper in India?
Commercial papers are traded amongst large institutions with significant investment amounts. However, individuals can also buy these through a dealer or via the financial institution. But their organisation should have high earning capability, liquidity, and should be renowned.
4. What is the Commercial Paper Market?
Commercial paper is a component of the Indian money market wherein the large corporations having a deficit of liquid funds to meet the short-term obligations invest in a debt instrument. This helps them evade the financial crisis situation and ensure they have enough liquid funds or working capital to carry the business operation.
5. Who Buys Commercial Papers?
Large companies, as well as individuals, can buy these commercial papers. Individuals can buy these from a broker, but the amount for investment is significant.