Guidelines for Issue of Certificates of Deposit
The Reserve Bank of India has issued guidelines for the issue of Certificates of Deposit (CDs), which are negotiable instruments.
Eligibility: CDs can be issued by scheduled commercial banks, excluding Regional Rural Banks and Local Area Banks.
Aggregate Amount: There is no limit on the aggregate amount of CDs that can be issued.
Minimum Size of Issue and Denominations: The minimum size of issue is ₹1 lakh, and denominations can be in multiples of ₹1 lakh.
Investors: CDs can be issued to individuals, corporations, trusts, and other entities.
Maturity: CDs can have a maturity period ranging from 7 days to 1 year.
Discount / Coupon Rate: The discount or coupon rate will be determined by the issuer.
Reserve Requirements: CDs are subject to reserve requirements as specified by the RBI.
Transferability: CDs are freely transferable.
Trades in CDs: Trades in CDs can be settled in the same manner as commercial paper.
Settlement: Settlement of CDs will be through the RBI’s Negotiated Dealing System (NDS).
Loans / Buy-backs: Banks can grant loans against CDs and buy back CDs before maturity.
Format of CDs: The format of CDs is specified in Annex I.
Security Aspect: CDs are negotiable instruments and are not secured by any collateral.
Payment of Certificate: Payment of CDs will be made on the maturity date.
Issue of Duplicate Certificates: Duplicate CDs can be issued in case of loss or destruction of the original.
Accounting: CDs will be accounted for as per the RBI’s guidelines.
Standardised Market Practices and Documentation: Standardised market practices and documentation will be followed.
Reporting: Banks will report CD issuance and trading to the RBI.
Chat with the Master Circular:
Download: Master Circular – Guidelines for Issue of Certificates of Deposit