Banking Term: Certificate of Deposit (CD)

Find important banking term that is useful in upcoming banking exam.

Mar 31, 2015 14:11 IST

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.

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