Thursday, March 15, 2007


Certificates of Deposit (CD) is a negotiable money market instrument and issued in dematerialised form or as a Usance Promissory Note, for funds deposited at a bank or other eligible financial institution for a specified time period with the objective of further widening the range of money market instruments and giving the investors greater flexibility in deployment of their short-term surplus funds.

The various guidelines issued by the RBI for issue of CDs from time to time are as follows:

  • CDs can be issued by (i) Scheduled Commercial Banks excluding Regional Rural Banks (RRBs) and Local Area Banks (LABs); and (ii) All India Financial Institutions (FIs) that have been permitted by RBI to raise short-term resources within the umbrella limit fixed by RBI.  
  • Minimum amount of a CD should be Rs.1 lakh and in the multiples of Rs. 1 lakh thereafter.
  • Physical CDs are freely transferable by endorsement and delivery.
  • Dematted CDs can be transferred as per the procedure applicable to other demat securities. 
  • There is no lock-in period for the CDs. 
  • The maturity period of CDs issued by banks should be not less than 7 days and not more than one year. 
  • Banks/FIs cannot grant loans against CDs. Also they cannot buyback their own CDs before maturity. 
  • In case of the loss of physical certificates, duplicate certificates can be issued.  


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