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RBI revises rules for commercial paper
rbi, reserve bank of india by shah junaid | Photo Credit: Shah Junaid/VCCircle

The Reserve Bank of India (RBI) issued revised guidelines for commercial paper, including mandating that the issuer must disclose the end-use of such funds and that it cannot buy back its securities before 60 days from the sale to investors.

The central bank, in a circular late on Thursday, added the issuer will also need to ensure that proceeds from CP issuance are used to finance only current assets and operating expenses.

Among other guidelines, the RBI said the issuer must receive at least two ratings from a credit agency, and would have to assign the lower rating to the CP, up from a requirement of needing only one rating.

CP issuers must now also keep any lender from which it has outstanding loans informed about such market borrowing.

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