Gujarat BoardEnglish MediumSTD 12 CommerceOCMFINANCIAL MARKET3 Marks
Question
Give an idea about certificate of deposits.
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Answer
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.
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