Certificate of Deposit (CD) refers to a money market instrument, which is negotiable and equivalent to a promissory note. It is either issued in demat form or in the form of a usance promissory note. This instruments is issue in lieu of the funds deposited at a bank for a specified time period.
All scheduled commercial banks excluding Regional Rural Banks (RRBs) and Local Area Banks (LABs) and select All India Financial Institutions permitted by RBI can issue Certificate of Deposit. Certificate of Deposit can be issued to individuals, corporations, companies, trusts, funds, associations etc. The Non resident Indians are also eligible for CDs provided they don’t repatriate the funds.
Minimum amount for Certificate of Deposit has been fixed at Rs. 1 Lakh, to be accepted from a single subscriber Larger amounts have to be in the multiples of Rs. 1 Lakh.