Commercial paper (CP) is an unsecured, short-term debt instrument issued by corporations to meet short-term liabilities. CP was introduced in India in 1990 to provide highly rated corporations an alternative to bank borrowing. Only reputable corporations with good credit ratings can issue CPs to borrow at lower interest rates than banks and save on financing costs. CPs can be issued for periods between 15 days to one year, making them suitable for meeting working capital or current asset needs.

9. And for what maturity periods are CPs issued? CPs can be issued for maturities between a minimum of 15 days and a maximum of up to one year from the date of issue. Therefore it is used to fund the working capital or current requirements of organizations.