{"id":63447,"date":"2025-09-14T15:46:40","date_gmt":"2025-09-14T10:16:40","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=63447"},"modified":"2025-09-16T15:24:42","modified_gmt":"2025-09-16T09:54:42","slug":"certificate-of-deposit-cd","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/certificate-of-deposit-cd\/","title":{"rendered":"Certificate of Deposit (CD)"},"content":{"rendered":"<h2><b>Certificate of Deposit Latest News<\/b><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Issuance of certificates of deposit (CDs) by banks has fallen sharply in the last few months, pushing mutual funds to explore alternative money market instruments such as treasury bills and commercial papers to park funds.<\/span><\/p>\n<h2><b>About Certificate of Deposit<\/b><\/h2>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">It is a <\/span><b>fixed-income financial tool<\/b><span style=\"font-weight: 400;\"> that is <\/span><b>governed by the Reserve Bank of India<\/b><span style=\"font-weight: 400;\"> (RBI) and is <\/span><b>issued in a dematerialized form.\u00a0<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">It is a type of <\/span><b>agreement made between the depositors and the banks, <\/b><span style=\"font-weight: 400;\">wherein the <\/span><b>bank pays an interest on your investment.<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">It is a <\/span><b>short-term investment<\/b><span style=\"font-weight: 400;\"> that comes with <\/span><b>fixed investment amounts<\/b><span style=\"font-weight: 400;\"> and <\/span><b>maturity <\/b><span style=\"font-weight: 400;\">tenure ranging <\/span><b>between 1-3 years.<\/b><\/li>\n<\/ul>\n<h2><b>Features of <\/b><b>Certificate of Deposit<\/b><\/h2>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">A CD in India can be issued for a<\/span><b> minimum deposit of Rs. 1 lakh<\/b><span style=\"font-weight: 400;\"> or in subsequent <\/span><b>multiples of it.<\/b><\/li>\n<li style=\"text-align: justify;\"><b>Eligibility Criteria<\/b><span style=\"font-weight: 400;\">:\u00a0<\/span>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">CDs are <\/span><b>issued by the Scheduled Commercial Banks (SCBs)<\/b><span style=\"font-weight: 400;\"> and <\/span><b>All-India Financial Institutions.\u00a0<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The <\/span><b>Cooperative Banks and the Regional Rural Banks (RRBs)<\/b><span style=\"font-weight: 400;\"> are <\/span><b>not eligible <\/b><span style=\"font-weight: 400;\">for issuing a CD.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">It is<\/span><b> issued to individuals, corporations, companies, and funds<\/b><span style=\"font-weight: 400;\">, among others.\u00a0<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">CDs could <\/span><b>also be issued to NRIs but on a non-repatriable basis only.\u00a0<\/b><\/li>\n<\/ul>\n<\/li>\n<li style=\"text-align: justify;\"><b>Maturity Period:\u00a0<\/b>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The maturity period of a CD can range <\/span><b>between 7 days and 1 year<\/b><span style=\"font-weight: 400;\"> when issued <\/span><b>by commercial banks.\u00a0<\/b><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">However,<\/span><b> for other financial institution<\/b><span style=\"font-weight: 400;\">s, the maturity period ranges from <\/span><b>1 year to 3 years.<\/b><\/li>\n<\/ul>\n<\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">CDs are<\/span><b> offered at discount rates or floating rates,<\/b><span style=\"font-weight: 400;\"> depending on the banks\u2019 requirements.<\/span><\/li>\n<li style=\"text-align: justify;\"><b>Interest Rates:<\/b><span style=\"font-weight: 400;\"> A CD <\/span><b>offers a higher interest rate than savings accounts<\/b><span style=\"font-weight: 400;\"> or some other fixed-term financial products.\u00a0<\/span><\/li>\n<li style=\"text-align: justify;\"><b>CDs in dematerialised form can be transferred through endorsement or delivery, <\/b><span style=\"font-weight: 400;\">similar to dematerialised securities. This feature <\/span><b>enhances the liquidity <\/b><span style=\"font-weight: 400;\">and ease of transactions for CDs.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Unlike some other financial instruments,<\/span><b> there is no lock-in period for a CD.<\/b><span style=\"font-weight: 400;\"> This flexibility <\/span><b>allows investors to access their funds or reinvest after the agreed-upon term<\/b><span style=\"font-weight: 400;\"> without restrictions.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Since CDs do not have any lock-in period,<\/span><b> CDs cannot be used as collateral,<\/b><span style=\"font-weight: 400;\"> and <\/span><b>banks can\u2019t buy back their own CDs before maturity.<\/b><\/li>\n<li style=\"text-align: justify;\"><b>Banks have to maintain the statutory liquidity ratio and cash reserve ratio on<\/b><span style=\"font-weight: 400;\"> the price of a <\/span><b>CD<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">A CD is <\/span><b>fully taxabl<\/b><span style=\"font-weight: 400;\"><strong>e<\/strong> under the Income Tax Act.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">A CD c<\/span><b>annot be publicly traded.<\/b><\/li>\n<\/ul>\n<p><b>Source<\/b><span style=\"font-weight: 400;\">: <\/span><a href=\"https:\/\/epaper.thehindu.com\/ccidist-ws\/th\/th_delhi\/issues\/148035\/OPS\/G9QET5GRL.1+GF0ET76TN.1.html\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">TH<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Certificate of Deposit is a fixed-income financial tool that is governed by the Reserve Bank of India (RBI) and is issued in a dematerialized form. <\/p>\n","protected":false},"author":23,"featured_media":63643,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[2689,21,22,23],"class_list":{"0":"post-63447","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"tag-certificate-of-deposit","9":"tag-prelims-pointers","10":"tag-upsc-current-affairs","11":"tag-upsc-prelims-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/63447","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=63447"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/63447\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/63643"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=63447"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=63447"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=63447"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}