Inter- Corporate Deposits

What are Inter-Corporate Deposits?

An Inter-Corporate Deposit (ICD) is an unsecured borrowing by corporates and FIs from other corporate entities registered under the Companies Act 1956. The corporate having surplus funds would lend to another corporate in need of funds.

How is the interest rate determined?

The ICD lending would be an uncollateralized basis and hence a higher rate of interest is demanded by the lender. The short-term credit rating of the borrowing corporate would determine the rate at which it would be able to borrow funds. Further, the credit spreads demanded even for the top-rated corporates would be higher than similar rated banks and the rates on ICDs would be higher than those in the Certificate of Deposit (CD) market.

What is the Tenor for Inter-Corporate Deposits?

The tenor of ICD may range from 1 day to 1 year, but the most common tenor of borrowing is for 90 days.

Are Primary Dealers permitted to borrow in Inter-Corporate Deposit Market?

Yes, Primary Dealers are permitted to borrow in the ICD market. The borrowing under ICD is restricted to 150% of the Net Owned Funds and the minimum tenor of borrowing is for 7 days. However, Primary Dealers cannot lend in the ICD market.

Contact Us:

STCI Primary Dealer Ltd. borrows funds in the ICD market. The company has a credit rating of ‘A1+’ from ICRA and CRISIL for its Short-Term Debt Programme. Corporates interested in placing deposits with us may contact on 022 6620 2213/232.