The interest rate on commercial paper (CP) which represents are an unsecured, short-term debt instrument issued by a company or a business, typically for financing working capital, inventories and meeting short-term liabilities. Maturities on CPs range from three months (90 days) to a year and the debt is usually issued at a discount, reflecting prevailing market interest rates. Through commercial paper, firms can borrow below base rate, which is the minimum rate the banks have to charge for credit provided through normal routes. However, firms cannot borrow for more than one year by tapping the CP market.

Additionally, banks provide short-term funds for the corporate sector by raising resources through issuances of short-term certificates of deposit (short-term CDs).