Abstract

A Commercial Paper (CP) is a short-term money market instrument used by Financial Institutions and Corporations to source funds from the public. It is a negotiable instrument transferable by endorsement and delivery. The CP market in India changed tremendously after July 1, 2010. This case presents the salient features of CPs issued in India and abroad, the legal framework related to the issue, the market position after July 1, 2010, the RBI guidelines on the issue of CPs in India, etc. It gives the reader a comprehensive idea of the instrument.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the CP as an instrument of the money market.
• Understand the importance and various codes of a rating agency through this instrument.
• Understand the usefulness of this instrument to the issuing agency.
• Analyze the Yield to Maturity (YTM) to an investor.
• Understand the guidelines issued by the regulator.

Keywords

Financial Scam, Ponzi Scheme, Certificate of Deposits, Allen Stanford, Stanford Financial Group, Securities and Exchange Commission, Bernard Madoff, Stanford International Bank