Consider the following statements about the Commercial Paper:

  1. It is an unsecured money market instrument
  2. Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) are not allowed to invest in commercial paper

  Which of the above statements is/are correct?

Answer: [A] 1 Only

First statement is correct because commercial paper is an unsecured money market instrument issued in the form of promissory notes. Corporates, primary dealers (PDs) and the All-India Financial Institutions (FIs) are eligible to issue CP. Second statement is incorrect because Individuals, banking companies, other corporate bodies (registered or incorporated in India) and unincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) etc. can invest in CPs. 

This question is a part of GKToday's Integrated IAS General Studies Module