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Certificates of Deposit


 
Certificate of Deposit (CD) is a negotiable money market instrument and issued in dematerialised form or as a Usance Promissory Note against funds deposited at a bank or other eligible financial institution for a specified time period. Scheduled Commercial Banks excluding Regional Rural Banks (RRBs) and local Area Banks (LABs); and select all-India Financial Institutions have been permitted by RBI to issue CDs. To the issuer, it offers a better opportunity to mobilize bulk resources to fund short term liquidity mismatches.
 
CDs are money market instruments and are issued at a discount to the face value and redeemed at par value. Banks / FIs are also allowed to issue CDs on floating rate basis provided the methodology of compiling the floating rate is objective, transparent and market-based. The tenor of issue can range from 7 days to 1 year. However most CDs are issued by banks for 3, 6 and 12 months.
 
CDs can be issued to individuals, corporations, companies, trusts, funds, associations, etc. Non Resident Indians may also subscribe to CDs. Such CDs cannot be endorsed to another NRI in the secondary market. However, they are mainly subscribed to by banks, mutual funds, provident and pension funds and insurance companies.
 
The minimum amount of a CD should be Rs. 1 Lac i.e., the minimum deposit that can be accepted from a single subscriber should not be less than Rs 1 Lac. and in multiples of Rs 1 Lac thereafter.
 
CD, being a short term instrument, is highly influenced by the prevailing liquidity conditions in the market. Hence, the market generally witnesses surge in volumes during quarter end and financial year end. There exists an active secondary market for CDs which witnesses an average volume of Rs 200-300 Cr per day with demand and supply determined by the liquidity conditions in the market.
 
Clients interested buying/selling CDs may contact our Sales Personnel on 022-66202224/25/28. We endeavor to provide the best possible returns to our clients, keeping in line with their overall investment objectives.
 
 
 

Latest News


In its first Bi-Monthly Monetary Policy for FY18, the MPC-panel maintained its pause on policy rates, whilst reiterating its neutral stance.
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The panel forecasts mild upside risks to its inflation projections, while GVA growth is expected to remain healthy at 7.4% for FY18.
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India’s consumer price-based inflation dropped to new record low of 2.99% in April on the back of decline in prices of food articles including pulses and vegetables.
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India’s WPI based on the revised 2011-12 series edged lower to 3.85% in April as manufactured goods and food articles indicated cooling of prices.
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Further fine-tuning the existing liquidity framework, RBI narrowed the LAF corridor to +/- 50 bps vis a vis the earlier +/- 100 bps.
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Consequently, the policy rates are as follows: 1. Repo rate: 6.25%, 2. Reverse repo: 6% , 3. MSF at 6.50%.
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