Whether Stand by facility is required to be provided by the bankers/FIs for CP issue?
CP being a `stand alone’ product, it would not be obligatory in any manner on the part of banks and FIs to provide stand-by facility to the issuers of CP. However, Banks and FIs have the flexibility to provide for a CP issue, credit enhancement by way of stand-by assistance/credit backstop facility, etc., based on their commercial judgement and as per terms prescribed by them. This will be subjected to prudential norms as applicable and subject to specific approval of the Board. 19. Whether non-bank entities/corporates can provide guarantee for credit enhancement of the CP issue. Yes. Non-bank entities including corporates can provide unconditional and irrevocable guarantee for credit enhancement for CP issue provided : a. the issuer fulfils the eligibility criteria prescribed for issuance of CP; b. the guarantor has a credit rating at least one notch higher than the issuer by an approved credit rating agency and c. the offer document for CP properly discloses: the networth of the guar
