Certificate of Deposit (CD) – Definition, Features, Eligibility

certificate of deposit eligibility features
certificate of deposit eligibility features

Certificate of Deposit (CD) Definition : A Certificate of Deposit (CD) is a negotiable money market instrument issued in dematerialised form against fund deposited in a bank or other eligible FI for a specific period or it is an agreement to deposit a lump-sum amount of money with a bank for a predetermined period of time. Certificate of Deposit (CDs) were introduced in India in 1989 with a view to further widening the range of money market instruments and giving investor greater flexibility in deployment of their short term surplus funds.

Features of Certificate of Deposit (CD)


Who can issue Certificate of Deposits (CDs)?

CDs can be issued by

  • Scheduled Commercial Banks (excluding RRBs and Local Area Banks)
  • Select All India Financial Institutions (FIs) within limit as fixed by RBI.

Who can invest in Certificate of Deposits (CDs)?

  • Individuals
  • Companies (including banks and PDs)
  • Corporations
  • Trusts
  • Funds
  • Associations

Non Resident Indians (NRIs) may also invest in CDs, but only on non repatriable basis, which should be clearly stated on the Certificate. Such CDs cannot be endorsed to another NRI in secondary market.

Minimum size of Issue and Denominations

Minimum amount of a CD should be ₹ 1 lakh, i.e, the minimum deposit that could be accepted from a single subscriber should not be less than ₹ 1 lakh and in multiples of ₹ 1 lakh thereafter.

Maturity Period of CD

In Case of Banks, the maturity of CDs should not be less than 7 days and not more than one year, from the date of issue.

In Case of FIs, maturity period of CDs should not be less than 1 year and not exceeding 3 years, from the date of issue.


CDs issued in physical form are freely transferable by endorsement and delivery. However, CDs held in demat form is transferred as per guidelines followed by demat securities.

Discount/Coupon Rate

CDs are discounted instruments. They are issued at a discount on its face value and redeemed at par value. Banks/ FIs can issue certificate of deposit on a floating rate basis provided the methodology of calculating floating rate is market based.


Banks should include the amount of CDs in the fortnightly return under Section 42 of the RBI Act, 1934. Further, banks / FIs should report the data on issuance of CDs on the web-based module under the Online Returns Filing System (ORFS) within 10 days from the end of the fortnight to which it pertains.


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