The Reserve Bank of India vide its notification dated 4th June 2021 has published the the Master Direction – Reserve Bank of India (Certificate of Deposit) Directions, 2021 which shall come into force from 7th June 2021.
The Certificate of Deposit shall be issued to all persons resident in India and shall be issued by Scheduled Commercial Banks; Regional Rural Banks; and Small Finance Banks.
The CDs shall be issued only in dematerialised form and held with a depository registered with Securities and Exchange Board of India and shall be issued in minimum denomination of ₹5 lakh and in multiples of ₹5 lakh thereafter.
The tenor of a CD at issuance shall not be less than seven days and shall not exceed one year and the CDs shall be traded either in Over-the-Counter (OTC) markets, including on Electronic Trading Platforms, or on recognised stock exchanges with the approval of the Reserve Bank.
Further the Banks are not allowed to grant loans against CDs, unless specifically permitted by the Reserve Bank and there shall be no grace period for repayment of CDs.
