Question

With a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to providing an additional instrument to investors, the commercial paper was first introduced in India in which of the following years ?

• A. 1980
• B. 1985
• C. 1950
• D. 1995
• E. 2000

Answer 1

The correct option is C 1950

Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. It was introduced in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors. Subsequently, primary dealers and all-India financial institutions were also permitted to issue CP to enable them to meet their short-term funding requirements for their operations.