Issuance of CP’s can be directly carried out in dematerialised form. Process flow of Direct credit in demat form is summarised below:
- All procedures undertaken during the normal issue of CP’s is to be carried out by the Issuer.
- Prior to the allotment, option is provided to the investor to receive securities in dematerialized form.
- To receive securities in dematerialized form, the investor has to mention the demat account number, name of DP and DP Identification Number so that CP’s allotted can be credited into the account.
- On finalisation of allotment, the Issuer or/and its Registrar and Transfer Agent communicates the list of allottees alongwith corresponding details and securities allotted to NSDL.
- After validation, Direct credit of the accounts will be carried out by NSDL through Corporate Action.
- On credit, details of
holdings are available to the CP holders through the Holding/Transaction
Statement provided by Depository Participant.
REDEMPTION OF COMMERCIAL PAPERS IN DEPOSITORY
- Issuer opens a depository account with any of the Depository Participant for the purpose of redemption.
- Demat Account number and DP ID of the redemption account is communicated to the CP holders who hold the CP’s in demat form.
- On completion of redemption formalities, CP holders will give a transfer instruction for transfer of balances to the Issuer’s redemption account.
- CP’s in demat form is finally extinguished by carrying out debit-type corporate action of Issuer’s redemption account which will be initiated by Share Registrar in Co-ordination with NSDL.
Note: As per RBI guidelines, CP can be issued in denominations of Rs. 5 Lakhs or multiples thereof. The direct electronic credit / transfer request have to be made in terms of Quantity of securities with each security having face value of Rs. 5,00,000/-. For example - If a DP receives demat request for Rs. 50,00,000/-, DP will enter 10 (securities) in the quantity field.
Thus balances of securities in the statement of account represent number of securities each having face value of Rs. 5,00,000/-. For example, if an investor holds 100 securities, the value of this holding is Rs. 5,00,00,000/- of Commercial Paper.