Beruflich Dokumente
Kultur Dokumente
Instruments)
7th Sem.
Rajdip Bhadra Chaudhuri
Assistant Professor,
School of Law,
KIIT Deemed to be University.
Commercial Papers
Unsecured MM Instrument
Issued in form of promissory notes
Privately placed
Introduced in 1990
High rated corporate borrowers can diversify their short term borrowings
Provide additional instrument to investors
Primary Dealers, All India Fin. Inst, also permitted to issue CP
Directives of RBI act as guidelines
Maturity - 7 days to 1 yr from date of issue
Credit rating required
Maturity period cannot be more than credit rating period
Issued in denomination of Rs. 5 lakhs & multiple thereof
Issuing & Paying agent – only Scheduled Bank
Total amount of CP to be within limits approved by BOD or quantum
indicated by CRA
Issuing & holding allowed in DMAT and Physical form.
Certificates of Deposits
Negotiable MM Inst.
Issued in DMAT form or usance prom. Notes
Given against funds deposited at bank or eligible FI for
specific time period
Governed by directives of RBI
Issued by SCBs excluding RRBs & LABs
Selected AIFIs permitted to raise short term resources
Maturity – 7 days to 1 yr (Bank)
Maturity – 1 yr to 3 yrs (FI)
Banks to maintain appropriate reserve (CRR & SLR)
Physical CDs freely transferable by endorsement &
delivery
Demat CDs transferred as per procedure
Treasury Bills
Issued by RBI
Finance short term requirements of GOI
Discounted securities (issued at a discount to face value)
Return to investors = Mat. Value - Issue price
Short term surpluses in current a/c deployed to max.
return
Deployment for very short term
No TDS
Zero default risk as sovereign paper
Issued in form of Prom. Notes in physical form or
Credit to Subsidiary General Ledger Account of Gilt a/c in
Demat form
Min. amount Rs. 10,000 & multiple thereof
Participatory Notes
Offshore financing instruments
Allows foreign HNWI, Hedge Funds & other investors to invest in
Ind. Stock market without being registered with SEBI
Saves time & cost of registration
Investor identity is not known
Underlying assets - Indian shares
Used outside India for making investments in Indian stock
market
Issued by brokers & FIIs registered with SEBI
Dividend or C.G. collected from underlying securities go back to
investors
Mandatory reporting to SEBI in each quarter.
P notes easily traded overseas through endorsement & delivery
Regulating P Notes
Dec., Dec., Dec., Jan., Dec., Dec., Dec., Dec., Dec., July,
2003 2004 2005 2008 2008 2009 2014 2016 2017 2018
29,030 67,886 104,179 330,704 71,320 168, 233,67 157,3 124,81 80,341
632 7 06 0
Equity, Equity, Equity, Equity, Equity, Equity, Equity, Equity, Equity, Equity,
Debt Debt & Debt & Debt & Debt Debt Debt Debt Debt Debt
& Deriv. Deriv. Deriv. & & & & & &
Deriv. Deriv. Deriv. Deriv. Deriv. Deriv. Deriv.
Equity Equity Equity Equity Equity Equity Equity Equity Equity Equity
23,230 63,791 92,700 298,965 62,267 118,14 164,78 100,92 91,755 60,550
2 5 7
P Notes mechanism
Hedge Fund
Sell
Infosys PROFIT
Buy SBI
Foreign Broking House
Sell
REPATRIATI
Infosys
ON
Buy SBI
Foreign Broking House
(India)
Sell Buy
Infosys SBI
Profit
Banker’s Acceptance
Used in USA & Europe
Primarily financing international trade – helps in export & import
Origin – London – 18th century
USA 1913 – Federal Reserve System – BA introduced
India – after 2000 – as growing economy
A time draft or bill of Exchange
Drawn on & 'accepted' by a bank as its commitment to pay a 3rd party
BA is accepted when Bank writes on the draft its agreement to pay it on
maturity
Bill or draft contains an order to pay a specified amount of money at a
specified time, and may be accepted by the bank
BA substitutes bank’s creditworthiness for that of a borrower