Commercial Paper (CP), an unsecured money market instrument issued in the form of a promissory note, was introduced in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and provide an additional instrument to the investors. The debt is usually issued at a discount, reflecting prevailing market interest rates.

Commercial Paper is issued by Corporates, primary dealers (PDs) and all-India financial institutions (FIs) that have been permitted to raise short-term resources under the umbrella limit fixed by the Reserve Bank of India. Since it is not backed by collateral, only companies with minimum credit rating of P-2 will be able to sell their commercial paper at a reasonable price. Maturities on commercial paper ranges between minimum of 7 days and a maximum of up to one year from the date of issue. CP’s are issued in denominations of Rs.5 lakh or multiples thereof. For more detail, please refer to RBI circular no. IDMD.DOD.14 /11.08.36/2010-11 dated 1st July, 2010.

Any amount raised by the issue of bonds or debentures secured by the mortgage of any immovable property of the company; or by any other asset or with an option to convert them into shares in the company provided that in the case of such bonds or debentures secured by the mortgage of any immovable property or secured by other assets, the amount of such bonds or debentures shall not exceed the market value of such immovable property/other assets.

ICD’s are unsecured borrowings extended by one corporate to another. It provides Corporates with an opportunity to manage short term liquidity. As the cost of funds for a corporate in much higher than a bank, the rates in this market are higher than those in the other markets. ICD’s are unsecured, and hence the risk inherent is high. The ICD market is not very active. There are no regulatory restrictions on the tenor, rate or amount.

Structured Investment which offers the customer the opportunity to gain a higher rate of return than on a traditional term deposit. ELD’s are Privately Placed Debentures (PPD) denominated in Indian Rupees (INR), returns of which are linked to a listed equity underlying (e.g. stock, basket of stocks, Index).

The company will hedge its position using exchange traded derivatives.