Latest News | RBI Issues Norms on Certificate of Deposit
Get latest articles and stories on Latest News at LatestLY. The Reserve Bank of India (RBI) on Friday said Certificate of Deposit (CD) shall be issued in minimum denomination of Rs 5 lakh and in multiples of Rs 5 lakh thereafter.
Mumbai, Jun 4 (PTI) The Reserve Bank of India (RBI) on Friday said Certificate of Deposit (CD) shall be issued in minimum denomination of Rs 5 lakh and in multiples of Rs 5 lakh thereafter.
CD is a negotiable, unsecured money market instrument issued by a bank as a usance promissory note against funds deposited with it for a maturity period up to one year.
The Master Direction on Reserve Bank of India (Certificate of Deposit) Directions, 2021 further said CDs shall be issued only in dematerialised form and held with a depository registered with the Securities and Exchange Board of India (Sebi).
"CDs may be issued to all persons resident in India," it said, and added the tenor of the instrument at issuance should not be less than seven days.
Further, banks are not allowed to grant loans against CDs, unless specifically permitted by the Reserve Bank.
As per the RBI, issuing banks are permitted to buy back CDs before maturity, subject to certain conditions.
The central bank had issued draft directions for public comments in December 2020.
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)