What changed
RBI issued a master circular consolidating all existing guidelines on Certificates of Deposit as of June 30, 2007. This replaces earlier circulars listed in the appendix. No new rules were introduced; it's a compilation for easier reference.
What it means for you
Banks and FIs now have a single reference document for CD issuance, reducing compliance confusion. The rules remain unchanged: banks can issue CDs freely based on needs, while FIs must stay within the 100% net owned funds umbrella limit. This clarity helps in product design and regulatory reporting.
What you must do
- Update internal policy manuals to reference this master circular for CD issuance.
- Ensure CD issuance complies with minimum size (Rs.1 lakh), maturity (7 days-1 year for banks), and NRI non-repatriable rules.
- Maintain CRR and SLR on the issue price of CDs as per existing requirements.
- For FIs, monitor total short-term resource issuance to stay within the 100% net owned funds limit.
Who it affects
Scheduled commercial banks (excluding RRBs and LABs), All-India term lending and refinancing institutions, Treasury and compliance teams at banks and FIs, Investors in money market instruments
Can NRIs invest in CDs?
Yes, NRIs can subscribe to CDs, but only on a non-repatriable basis. This condition must be clearly stated on the certificate, and such CDs cannot be endorsed to another NRI in the secondary market.
What is the minimum amount for a CD?
The minimum amount of a CD is Rs. 1 lakh, meaning a single subscriber must deposit at least Rs. 1 lakh, and thereafter in multiples of Rs. 1 lakh.
What are the maturity rules for CDs issued by banks vs. FIs?
Banks can issue CDs with a maturity of not less than 7 days and not more than one year. Financial institutions can issue CDs for a period of not less than 1 year and not exceeding 3 years from the date of issue.