There are many money market instruments are used by Government of India and RBI to regulate th...........

Economic Affairs Financial Markets

There are many money market instruments are used by Government of India and RBI to regulate the money matters, one of them is” commercial papers “ which means:

To provide additional short term avenue to individual investors

Short-term unsecured promissory notes issued by companies

A certificate issued by a bank to a person depositing money for a specified length of time at a specified rate of interest.

Money or finance that is available only at high rates of interest.

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Explanation:

Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting short-term liabilities. Maturities on commercial paper rarely range any longer than 270 days. Commercial paper is usually issued at a discount from face value and reflects prevailing market interest rates. Commercial paper is not usually backed by any form of collateral, making it a form of unsecured debt. As a result, only firms with high-quality debt ratings will easily find buyers without having to offer a substantial discount (higher cost) for the debt issue. Because commercial paper is issued by large institutions, the denominations of the commercial paper offerings are substantial, usually $100,000 or more. Other corporations, financial institutions, wealthy individuals and money market funds are usually buyers of commercial paper.