economics medium True/False

In the Indian financial market, 'Commercial Papers' (CPs) are unsecured, short-term debt instruments issued primarily by the Government of India to meet its temporary fiscal deficits.

  1. True
  2. False

Answer: False

Commercial Papers are issued by highly rated *corporate entities*, primary dealers, and financial institutions to meet their short-term working capital needs. The Government of India does not issue CPs; instead, it issues Treasury Bills (T-bills) for its short-term borrowing requirements. Because CPs are unsecured, only companies with pristine credit ratings can access this market.

Topic Banking - Financial Markets
Exam Relevance Banking, UPSC Prelims, SSC
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