CDs are short-term borrowings in the form of Usance Promissory Notes having a maturity of lot less than 15 days up to a maximum of one year.

CD is subject to payment of Stamp Duty under Indian Stamp Act, 1899 (Central Act)

They are like bank term deposits accounts. Unlike traditional time deposits these are freely negotiable instruments and are often referred to as Negotiable Certificate of Deposits

Key Features of CD

All scheduled banks (except RRBs and Co-operative banks) are eligible to issue CDs

Issued to individuals, corporations, trusts, funds and associations

They are issued at a discount rate freely determined by the issuer and the market/investors.

CDs are freely transferable by endorsement and delivery. At present CDs are issued in physical form (UPN)

CDs are issued in denominations of Rs.5 Lakhs and Rs. 1 Lac thereafter. Bank CDs have maturity up to one year. Minimum period for a bank CD is fifteen days. Financial Institutions are allowed to issue CDs for a period between 1 year and up to 3 years. CDs issued by AIFI are also issued in physical form (in the form of Usance promissory note) and is issued at a discount to the face value.