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Certificates of Deposit


 
Certificate of Deposit (CD) is a negotiable money market instrument and issued in dematerialised form or as a Usance Promissory Note against funds deposited at a bank or other eligible financial institution for a specified time period. Scheduled Commercial Banks excluding Regional Rural Banks (RRBs) and local Area Banks (LABs); and select all-India Financial Institutions have been permitted by RBI to issue CDs. To the issuer, it offers a better opportunity to mobilize bulk resources to fund short term liquidity mismatches.
 
CDs are money market instruments and are issued at a discount to the face value and redeemed at par value. Banks / FIs are also allowed to issue CDs on floating rate basis provided the methodology of compiling the floating rate is objective, transparent and market-based. The tenor of issue can range from 7 days to 1 year. However most CDs are issued by banks for 3, 6 and 12 months.
 
CDs can be issued to individuals, corporations, companies, trusts, funds, associations, etc. Non Resident Indians may also subscribe to CDs. Such CDs cannot be endorsed to another NRI in the secondary market. However, they are mainly subscribed to by banks, mutual funds, provident and pension funds and insurance companies.
 
The minimum amount of a CD should be Rs. 1 Lac i.e., the minimum deposit that can be accepted from a single subscriber should not be less than Rs 1 Lac. and in multiples of Rs 1 Lac thereafter.
 
CD, being a short term instrument, is highly influenced by the prevailing liquidity conditions in the market. Hence, the market generally witnesses surge in volumes during quarter end and financial year end. There exists an active secondary market for CDs which witnesses an average volume of Rs 200-300 Cr per day with demand and supply determined by the liquidity conditions in the market.
 
Clients interested buying/selling CDs may contact our Sales Personnel on 022-66202224/25/28. We endeavor to provide the best possible returns to our clients, keeping in line with their overall investment objectives.
 
 
 

Latest News

In its Fifth Bi-Monthly
In its Fifth Bi-Monthly Monetary Policy for FY19, the MPC-panel maintained ‘status quo’. Consequently, key policy rates remained unchanged - Repo rate at 6.50%, Reverse repo at 6.25% and MSF at 6.75%.
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Inflation projections for
Inflation projections for 2018-19 were revised downwards as food inflation has remained benign. It is projected at 2.7%-3.2%% in H2 FY19 (3.8%-4.5% previously) and 3.8%-4.2% in H1 FY20.
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Growth for FY19
Growth for FY19 is projected at 7.4% with 7.2%-7.3% in H2 FY19 (7.3%-7.4% previously). Growth in H1 FY20 is projected to stand at 7.5%.
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RBI in its February policy
RBI in its February policy cut the repo rate by 25 bps while also changing the stance to ‘neutral’ from ‘calibrated tightening’. Consequently, key policy rates are pegged as follows - Repo rate at 6.25%, Reverse Repo at 6.00% and Marginal Standing Facility (MSF) at 6.50%
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The inflation projections
The inflation projections have been revised downwards to 2.8% in Q4 FY19 (from 2.7-3.2% earlier), 3.2-3.4% in H1 FY20 (from 3.8-4.2% earlier) and 3.9% in Q3 FY20
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GDP growth for FY20
GDP growth for FY20 has been projected at 7.4% - in the range of 7.2-7.4% in H1 (from 7.5% earlier) and 7.5% in Q3.
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Spurring a positive surprise
Spurring a positive surprise, Jan CPI stood significantly lower than market expectations at 2.05% vis-à-vis the revised Dec-18 estimate of 2.11% (2.19% previously). Lack of inflationary pressures in the services components led core CPI to also moderate, clocking in at 5.38%, a sharp fall from 5.68% in Dec-18.
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Industrial production rose
Industrial production rose by 2.4% in Jan-19 as compared to 0.3% in Feb-18. Cumulatively, IIP for FY19 stood at 4.6%, lower than 3.7% in FY18. Significant sequential uptick was observed across sectors; Mining (3.4%), Electricity (2.1%) and Manufacturing (6.8%)
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Wholesale inflation for Jan-19
Wholesale inflation for Jan-19 came in at 2.76%, lower than 3.80% registered in Dec-18. Broad-based fall in commodity prices amid deflationary pressures from food and fuel items led to this downtick in inflation. Consequently, core WPI inched down to 2.91%, as compared to 4.22% in Dec-18.
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