K.

J SOMAIYA COLLEGE OF ARTS AND COMMERCE

VIDYAVIHAR (EAST), MUMBAI-400077
PROJECT ON:

COMMERCIAL PAPER

BACHELOR OF COMMERCE (FINANCIAL MARKETS)

SEMESTER V (2015-2016)
SUBMITTED
In Partial fulfillment of the requirements for the Award of the degree of
Bachelor of Commerce (Financial Markets)

By
ALOK SAHU
ROLL NO : 43

CERTIFICATE
This is to certify that MR.ALOK.SAHU of B.COM FINANCIAL
MARKETS SEMESTER V (2015-2016) has successfully completed
the project on COMMERCIAL PAPER under the guidance of
PROF MRS. VIRENDER KAUR BHATIA.

(MRS VIRENDER KAUR BHATIA)

EXTERNAL EXAMINER

INTERNAL PROJECT GUIDE

PROF. HARESH PARPIANI

DR.(SMT) SUDHA VYAS

(BFM CO-ORDINATOR)

PRINCIPAL

DECLARATION

I, MR.ALOK SAHU the student of B.COM (FINANCIAL

MARKETS) SEMESTER-V (2015-2016)

hereby

declare

that I

have completed the project on COMMERCIAL PAPER

Where ever the data/information have been taken from any books or
other sources the same have been mentioned in bibliography.
The information submitted is true and original to the best of my
knowledge.

_________________
Signature of the

n Signature of the student

ALOK SAHU
(ROLL NO.43)

ACKNOWLEDGEMENT

I take this opportunity with great pleasure to present before you this project on
COMMERCIAL PAPER which is a result of co-operation and hard work .I
would like to express my deep sense of gratitude toward all those people without
whose guidance and inspiration this project would never be fulfilled.
Heartily, thanks to Mumbai University for giving me the opportunity to work
on this project. I would also like to thank our principal DR.(SMT) SUDHA VYAS
for giving me such a brilliant opportunity to present a creative outcome in the form
of a project.
Any accomplishment requires the efforts of many people and this project is not
different. I find great pleasure in expressing my deepest sense of gratitude towards
my project guide PROF MRS. VIRENDER KAUR BHATIA., whose
guidance & inspiration right from the conceptualization to the finishing stages
proved to be very essential & valuable in the completion of the project.
I would like to thank library staff, and my classmates for their invaluable
suggestions & guidance for my project work. Lastly, I would also like to thank my
parents without whose consent and support it would have not been possible for me
to complete this project

EXECUTIVE SUMMARY

Commercial paper, in the global financial market,is an unsecured promissory note

with a fixed maturity of no more than 270 days.
Commercial

paper

large corporations to

is

money-market security issued

obtain funds to

meet

(sold)

by

short-term debt obligations

(for

example, payroll), and is backed only by an issuing bank or corporation's promise

to pay the face amount on the maturity date specified on the note. Since it is not
backed

by collateral,

only

firms

with

excellent credit

ratings from

recognized credit rating agency will be able to sell their commercial paper at a
reasonable price. Commercial paper is usually sold at a discount from face value,
and generally carries lower interest repayment rates than bonds due to the shorter
maturities of commercial paper. Typically, the longer the maturity on a note, the
higher the interest rate the issuing institution pays. Interest rates fluctuate with
market conditions, but are typically lower than banks' rates.
Commercial paper though a short-term obligation is issued as part of a
continuous rolling program, which is either a number of years long.
Commercial paper is the collective term for a variety of instrumentsincluding
checks, certificates of deposit, and notesthat are used to pay for goods;
commercial paper is basically a contract to pay money. The key to the central role
of commercial paper is negotiability, the means by which a person is empowered to
transfer to another more than what the transferor himself possesses. The law
regulating negotiability is Article 3 of the Universal Commercial Code.
Commercial paper can be divided into two basic types: the draft and the note. A
draft is a document prepared by a drawer ordering the drawee to remit a stated sum
of money to the payee. Drafts can be subdivided into two categories: sight drafts

and time drafts. A note is a written promise to pay a specified sum of money on
demand or at a definite time.
A special form of draft is the common bank check, a draft drawn on a bank and
payable on demand. A special form of note is the certificate of deposit, a written
acknowledgment by a bank that it has received money and agrees to repay it at a
time specified in the certificate.
In addition to drawers, makers, drawees, and payees, one can deal with commercial
paper in five other capacities: as indorsers, indorsees, holders, holders in due
course, and accommodation parties.
A holder of a negotiable instrument must be able to ascertain all essential terms
from its face. These terms are that the instrument (1) be in writing, (2) be signed by
the maker or drawer, (3) contain an unconditional promise or order to pay (4) a
sum certain in money, (5) be payable on demand or at a definite time, and (6) be
payable to order or to bearer. If one of these terms is missing, the document is not
negotiable, unless it is filled in before being negotiated according to authority
given.

INDEX
SR.NO

TOPIC

PG.NO

INTRODUCTION TO COMMERCIAL PAPER

1-3

HISTORY OF COMMERCIAL PAPER

4-5

ISSUANCE

6-15

LINE OF CREDIT

16

COMMERCIAL PAPER YIELDS

17-18

BASIC CHARACTERISTICS

19-21

COMMERCIAL PAPER MARKETS

22-23

RATES & PRICING

24-26

MONEY MARKET COMMERCIAL PAPER

27-28

10

TAX EXEMPT COMMERCIAL PAPER

29

11

ASSET BACKED COMMERCIAL PAPER

30-31

12

COMMERCIAL PAPER FUNDING

PROGRAM(CCFP)

32

13

ADVANTAGES/DISADVANTAGES OF
COMMERCIAL PAPER

33-34

14

COMMERCIAL PAPER IN INDIA

35-37

15

GROWTH OF COMMERCIAL PAPER MARKET IN

INDIA

38-41

16

TYPES OF COMMERCIAL PAPER

42-47

17

NEGOTIABILITY

48-52

18

ENDORSEMENTS

53-58

19

DEFENSES

59-61

20

COMMERCIAL PAPER: MORE RISK LESS

62-66

RETURN

21

RECOMMENDATION & CONCLUSION

67

22

BIBLIOGRAPHY

68

23

WEBLIOGRAPHY

69