Certificate of Deposit (CD)

👉👉Certificate of Deposit (CD) is a negotiable, unsecured money market instrument issued by a bank as a Usance Promissory Note against funds deposited at the bank for a specified time period.

👉👉Eligible issuers

Certificates of Deposit (CDs) can be issued by:

1-Scheduled Commercial Banks (excluding Regional Rural Banks);

2-Small Finance bank

3-Regional Rural Banks

4- All India Financial Institution

👉👉Eligible investors:

CDs can be issued to all persons resident in India and 

👉to non-residents to the extent permitted under the Foreign Exchange Management Act (FEMA), 1999.

👉👉Primary issuance:

👉CDs shall be issued only in dematerialised form and held with a depository registered with Securities and Exchange Board of India.

👉CDs shall be issued in minimum denomination of ₹5 lakh and in multiples of ₹5 lakh thereafter.

👉The tenor of a CD at issuance shall not be less than 7 days and shall not exceed 1 year.

👉CDs shall be issued on a T+1 basis where T represents the date of closure of the offer period for issuance of the CDs.

👉👉Secondary market - trading venue and settlement:

CDs shall be traded either in Over the Counter (OTC) markets, including on Electronic Trading Platforms (ETPs), or on recognised stock exchanges with the approval of the Reserve Bank.

👉The settlement cycle for OTC trades in CDs shall be T+0 or T+1

👉All secondary market transactions in CDs shall be settled on a DvP I basis through the clearing corporation of any recognized stock exchange...

👉👉Loans against CDs:

Banks are not permitted to grant loans against CDs

👉👉Buyback of CDs:

👉Issuing banks are permitted to buyback CDs before maturity.

Buyback of CDs shall be subject to the following conditions:

👉Buyback of CDs can be made only 7 days after the date of issue of the CD.

👉The buyback offer shall be made to all investors.

 

👉The investors shall have the option to accept or reject the buyback offer.

👉Buyback of CDs shall be at the prevailing market price.

👉👉Reporting requirements

👉Primary issuances: 

Details of primary issuance of a CD shall be reported by the issuer on the Financial Market Trade Reporting and Confirmation Platform (“F-TRAC”) of Clearcorp Dealing System (India) Ltd by 5.30 PM on the day of issuance.

👉Secondary market transactions on exchanges: 

All secondary market transactions in CDs undertaken on recognised stock exchanges shall be reported on the F-TRAC platform by the exchanges after the close of business on the same day.