What changed
RBI issued a master circular consolidating all prior instructions on Certificates of Deposit (CDs) as of June 30, 2008. No new policy changes were introduced; the circular merely updates and compiles existing guidelines into one reference document.
What it means for you
Banks and FIs now have a single source for CD issuance rules, reducing compliance ambiguity. The circular reaffirms that CDs remain a flexible short-term funding tool, with clear limits on maturity, minimum size, and subscriber eligibility. Reserve requirements (CRR/SLR) continue to apply on the issue price.
What you must do
- Update internal CD issuance policies to align with this master circular.
- Ensure CD documentation reflects the minimum deposit of Rs 1 lakh and multiples thereof.
- Verify that NRI subscriptions are clearly marked as non-repatriable and not endorsed to other NRIs.
- Maintain CRR and SLR on the issue price of CDs as per existing norms.
Who it affects
Scheduled commercial banks (excluding RRBs and LABs), All-India Financial Institutions permitted by RBI to issue CDs, Treasury and ALM desks of banks and FIs, Compliance and documentation teams
What is the minimum amount for a single CD subscription?
The minimum deposit from a single subscriber is Rs 1 lakh, and further subscriptions must be in multiples of Rs 1 lakh.
Can NRIs invest in CDs, and are there any restrictions?
Yes, NRIs can subscribe to CDs only on a non-repatriable basis, which must be clearly stated on the certificate. Such CDs cannot be endorsed to another NRI in the secondary market.
What are the maturity ranges for CDs issued by banks vs. FIs?
Banks can issue CDs with maturity from 7 days to 1 year. Financial Institutions can issue CDs for a period of 1 year to 3 years from the date of issue.