Rapid Fire
Certificates of Deposit
- 03 Jul 2024
- 2 min read
Recently, the Clearing Corporation of India released data that revealed that Commercial banks have mobilised Rs 1.45 trillion through Certificates of Deposit (CDs) to strengthen their balance sheets.
Certificates of Deposit (CDs):
- A CD is a negotiable, unsecured money market instrument offered by banks and credit unions that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period.
- In other words, it pays a fixed interest rate on money held in banks for an agreed-upon period.
- CDs can be issued by scheduled commercial banks and All-India Financial Institutions (FIs) to individuals (including NRIs), corporations, companies, trusts, funds, associations, etc.
- A minimum amount of a CD should be Rs.1 lakh and thereafter permits multiples of it.
- The maturity period of CDs issued by banks ranges from 7 days to one year, while for FIs this limit is from 1 year to upto 3 years from the date of issue.
Clearing Corporation of India (CCIL):
- Established in 2001, it provides reliable clearing and settlement services in the Money and Government Securities markets.
Read more: Banking Sector: Opportunities and Challenges
