Question

Give an idea about certificate of deposits.

Answer 1

Certificate of Deposits (CD):

• A certificate of deposit (CD) is a money market instrument to procure short term finance from people.
• CD can be issued to individuals, firms, companies, etc. by scheduled commercial banks and financial institutions.
• Minimum amount of CD is ₹ 1 lakh. The banks pay a specific interest on these CDs.
• Although, certificate of deposits look quite similar to fixed deposits (FD), they are not. Certificate of deposits is negotiable and can be sold whereas fixed term deposit receipt is neither negotiable nor it can be sold.