Certificate of deposit is a negotiable money market instrument issued in dematerialised form or as a Usance Promissory Note by scheduled commercial banks excluding Regional Rural Banks (RRBs) and local Area Banks (LABs); and select all-India Financial Institutions that have been permitted by RBI to raise short-term resources.

CDs are discounted instruments and are issued at a discounted price and redeemed at par value. 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 (other than minors), corporations, companies, trusts, funds, associations, etc. Non Resident Indians may also subscribe to CDs. 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 lakh i.e., the minimum deposit that can be accepted from a single subscriber should not be less than Rs 1 lakh. and in multiples of Rs 1 lakh thereafter.

There exists an active secondary market for CDs which witnesses an average volume of Rs 200-300 crore per day with demand and supply determined by by the liquidity conditions in the market.