May 6, 2018

Low risk Investment: Certificate of Deposit (CD).

Certificate of Deposit


Certificate of Deposit (CD) is the lowest risk category investment option after treasury bills, These are issued by scheduled commercial banks (SCB) and a select categorc of financial institutions. In India, Regional Rural Banks (RRB) and Local Area Banks (LAB) are not eligible to issue CDs.
  • Individuals, Companies,Associations,etc are eligible to invest in CDs. 
  • Minimum lock in period in case of Scheduled Commercial Banks is 15 days and maximum is up to 1 Year. In case of Financial Institutions the mimimin lock in period is 1 Year and maximum 3 years.
  • Banks are not authorised to fund Loans against rhe CDs.
  • Minimum amount you can invest in CDs is 1Lakh and above that you can invest in multiples of 1 Lakhs.
  • Non-Resident Indians (NRI's) can invest in CDs, these are non-repatriable. CDs cannot be sold to another NRI in a secondary market.
  • CD is a negotiable promissory note, secure and short term in nature.
  • CD is issued at a lower price to the original value, the discount rate being negotiated between the insurer and the investor.
  • SCB's and Financial Institutions are not eligible to buy back their CDs prior to the maturity period.


Even though CD offers low interest rate to the investors they are risk free and a good place for Individuals and Companies which are looking for investing in safe and short term investments.

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