Finance · Money Market Instruments
'TechCorp Ltd.,' a highly rated manufacturing company, plans to raise 10 crore in short-term working capital by issuing Commercial Paper (CP) directly to institutional investors. Meanwhile, ApexBank needs to raise 50 crore quickly to manage its immediate funding requirements and decides to issue Certificates of Deposit (CDs). Which combination of statements accurately reflects the minimum issuance amount and the nature of these two instruments as per RBI guidelines?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The minimum Commercial Paper issuance amount for a single investor is 5 lakh, and it must be in multiples of 1 lakh thereafter. CDs have no minimum issuance amount but are subject to a maximum tenor of 3 years.
- 2The minimum Commercial Paper issuance amount for a single investor is 10 lakh, and it can be issued for a maximum tenor of 36 months. The minimum Certificate of Deposit issuance amount is 5 lakh, but it must be issued only to individuals and mutual funds.
- 3The minimum issuance amount for a single Commercial Paper is 5 lakh, and the amount must be in multiples of 5 lakh thereafter. The minimum issuance amount for a single Certificate of Deposit is also 5 lakh, and the amount must be in multiples of 5 lakh thereafter. Both are unsecured, negotiable money market instruments.✓
- 4The minimum issuance amount for a Commercial Paper is 1 crore, and the minimum denomination for a single investor's subscription to a Certificate of Deposit is 1 lakh. CDs are issued by corporates, and CPs are issued by banks.
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