commercial paper and negotiable instruments quiz

#Commercial paper and negotiable instruments quiz pdf

Furthermore, they cannot buy-back their own CDs before maturity.Answer : i Call Money: Call money is short-term finance repayable on demand with a maturity period of one day to fifteen days used for inter-bank transactions. Banks / FIs cannot grant loans against CDs.Banks / FIs are also allowed to issue CDs on floating rate basis

Interest Rate: CDs may be issued at a discount on face value. When Issued by Financial Institutions (FIs): 1 year to 3 yearsĭenomination: Minimum amount of a CD should be Rs.1 lakh and its multiple thereon.Non-Resident Indians (NRIs) may also subscribe to CDs, but only on non-repatriable basis Who can buy/invest in CDs: CDs can be issued to individuals, corporations, companies (including banks and PDs), trusts, funds, associations, etc. select All-India Financial Institutions (FIs) that have been permitted by RBI to raise short-term resources within the umbrella limit fixed by RBI.Introduction: Certificate of Deposit (CD) is a negotiable money market instrument and issued against funds deposited at a bank or other eligible financial institution for a specified time period. Interest Rate: CP will be issued at a discount to face value as may be determined by the issuer. can invest in CPs.ĭenomination: Minimum Rs 5 lakh or multiple thereof. Who can buy:Individuals, banking companies, other corporate bodies (registered or incorporated in India) and unincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) etc. The borrowal account of the company is classified as a Standard Asset by the financing bank/s/ institution/s.Company has been sanctioned working capital limit by bank/s or all-India financial institution/s and.The tangible net worth of the company, as per the latest audited balance sheet, is not less than Rs.Who can Issue CP: Corporates, primary dealers (PDs) and the All-India Financial Institutions (FIs)Įligibility Criteria for Company to issue CP:Ī corporate would be eligible to issue CP provided – Objective: To enable highly rated corporate borrowers and Primary Dealers to diversify their sources of short-term borrowings. Introduction: ‘Commercial Paper’ (CP) is an unsecured money market instrument issued in the form of a promissory note. The CMBs have the generic character of T-bills but are issued for maturities less than 91 days. Government of India, in consultation with RBI introduced a new short-term instrument, known as Cash Management Bills (CMBs), to meet the temporary mismatches in the cash flow of the Government of India.The bills will be transferable in terms of the Government Securities Act, 2006 and the Government Securities Regulations, 2007.Ĭash Management Bills- You can understand CMBs as T-Bills with maturity less than 91 days.

They are issued at a discount and redeemed at the face value at maturity.Įxplanation: For example, a 91 day Treasury bill of ₹100/- (face value) may be issued at say ₹ 98.20, that is, at a discount of say, ₹1.80 and would be redeemed at the face value of ₹100/. Interest Rate:T-Bills are zero coupon securities and pay no interest. Tenor/Maturity: Available in three tenor: 91 day, 182 day and 364 day.ĭenomination: Minimum Rs 25,000 and its multiple thereon. Who can buy: T-Bills can be purchased by any one (including individuals). Introductions: Treasury bills or T-bills, which are money market instruments, are short term debt instruments issued by the Government of India.

#Commercial paper and negotiable instruments quiz pdf

Banking and Economy News PDF – Month-wiseĬomparison between Treasury Bills (T-bills), Commercial Paper (CP) and Certificate of Deposit (CD)Ĭlick on the image to see a comparative study between T-bills, Commercial Paper (CP) and Certificate of Deposit (CD).Banking Awareness Concepts – Chapterwise.Union Budget 2022-23 Important Highlights with PDF.