Which financial market instrument represents a short-term debt obligation issued by corporate entities to meet working capital requirements in India?

💡 Solution & Explanation

Commercial Paper is an unsecured money market instrument issued in the form of a promissory note by highly rated corporate entities, primary dealers, and financial institutions to bridge short-term funding needs. It is issued at a discount to face value with maturities ranging from seven days to one year. Unlike Treasury bills which are sovereign obligations, commercial paper carries corporate credit risk. Guidelines for its issuance are jointly regulated by the Reserve Bank of India and market regulators.