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Certificate of Deposit

Certificate of deposit is a financial product which is bought and sold in money market. Certificate of deposit is a short term money market instrument used by banks to raise large amount of deposit from public. Every bank and financial institution can issue certificate of deposit after getting money of deposit from customers.  But it is different from public deposit because public deposit is the fund which a private and non-banking company only get.  Large number of individual and non-individual investors invest in it for getting earning. This certificate can be issued on discount. At that time, investor will pay face value minus discount for buying these certificate.

 These certificate can be issued minimum for 7 days and maximum for 12 months.  Minimum issue of CD will be Rs. 1 Lakh. In USA, minimum issue is $ 100,000. Like other shares and bonds. CD can also be transferred from one investor to other through  DEMAT account. Bank can not give loan on the basis of the security of certificate of deposit.

Certificate of Deposit Rates

In India, rate of interest which is paid on certificate of deposit is not fixed by RBI but it is fixed in open market demand and supply powers. But in USA, CD treats as fixed deposit and same rate of interest applies on it. You can find every bank's CD Rate on bankrate.com which monitor bank rates and provides updated information of interest rates.

Related : Debt Securitization

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Accounting Education: Certificate of Deposit
Certificate of Deposit
Accounting Education
https://www.svtuition.org/2011/09/certificate-of-deposit.html
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