Commercial paper was introduced in India in 1990 on the recommendation of the Vaghul Committee. It is a short-term unsecured promissory note issued by highly creditworthy corporations to raise funds. Commercial paper is popular due to its high liquidity and low cost compared to other money market instruments. Only large companies with substantial financial strength can issue commercial paper. It must be backed by strong credit ratings and tangible net worth of issuing companies. Commercial paper provides companies with an alternative source of short-term financing at a lower interest rate than bank loans.