The Certificate of Deposit is an agreement between the bank and the depositor where a predetermined amount of money is fixed for a certain period of time. Regulated by the RBI and issued by authorized banks, the Certificate of Deposit is a promissory note on which the interest is paid by the bank. This is the certificate of deposit meaning.
Now that you know what is a certificate of deposit, let me tell you about its features.
Features of a Certificate of Deposit TransferabilityWhile dematerialized/electronic certificates can be transferred by delivery or endorsement, the Certificates in Demat forms need to be transferred as per the guidelines followed by Demat securities.
Minimum investment amountA Certificate of Deposit can be issued to a single issuer for a minimum of Rs. 1,00,000 and its multiples
Maturity Period:The maturity period of a CD issued by the commercial banks can range from seven days to one year. For financial institutions, it ranges from one year to three years.
EligibilityNot all banks or institutions are allowed to issue CDs and not every organization or individual can buy one. There are some conditions laid down by the Reserve Bank of India that allow the purchase of CDs.
Non-availability of loanBanks don’t give loans against them since these instruments don’t have any lock-in period. In fact, can’t even buy back CDs before maturity.
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Now you know about the certificate of deposit definition as well as its features.
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What is a certificate of deposit?
Sunny
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2022-02-09T12:43:34+00:00 2022-02-09T17:55:57+00:00Comment
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