Banking Term: Certificate of Deposit (CD)
- A certificate of deposit is a marketable receipt of funds deposited in a bank for a specified period at specified rate of interest. Liquidity and marketability are the hallmarks of certificate of deposits.
- This is an important source of mobilization of deposits for commercial banks.
- Certificate of Deposit is a negotiable instrument
- CD is also assumed as liquid asset because it can be transacted easily.
- CD’s can be issued by scheduled commercial banks excluding Regional Rural banks
- Stamp duty will be payable by the bank on CD, which is treated as usance promissory note.
- Certificate of deposit can be subscribed by individual, corporation, companies, trusts, funds, funds association etc.