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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

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RBI slashed the Statutory Liquidity Ratio by 50 bps from 20.0% to 19.5% of banks NDTL. The ceiling on SLR security’s under HTM will also be reduced from 20.25% to 19.50% in a phased manner by March 31, 2018
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In its Fourth Bi-monthly policy, the MPC panel kept the policy rates unchanged at 6.00% while maintaining a neutral policy stance
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Consequently, the policy rates are as follows: Repo rate: 6%, Reverse Repo rate: 5.75%, MSF rate: 6.25%
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The panel revised its inflation projection upwards for the second half of FY18 to 4.2-4.6% from 4.0%-4.5% in the previous policy
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India’s eight-core sector growth came in at 4.9% compared to 2.6% observed in the previous month mainly aided by a sequential increase in output of coal, fertilizers, steel and electricity
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Real GVA growth has been revised downwards to 6.7% for FY18 from 7.3% previously
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Surprising on the downside, headline CPI for Sep-17 came in at 3.28% as food prices saw a sharp decline. Additionally, the print for Aug-17 was also revised downwards to 3.28% compared to 3.36% estimated previously.
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Core inflation, however, stood 11 bps higher at 4.61% compared to 4.50% as implementation of HRA under the 7th CPC continued to impact housing prices.
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IIP registered a 4.3% growth in Aug as compared to 1.2% observed in July led by broad based growth across all sectors, viz. Manufacturing at 3.5%, Electricity at 2.3% and Mining at 0.3%.
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