Economics · Economy
Based on the RBI Master Direction on Money Market Instruments, which of the following statements regarding the characteristics and constraints of Certificates of Deposit (CDs) is entirely accurate?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1CDs are fully transferable by endorsement and delivery, and there is no lock-in period for CDs issued by scheduled commercial banks.
- 2Banks are allowed to grant loans against the collateral of CDs issued by them or other banks to maintain the credit flow in the economy.
- 3The minimum amount of a CD should be 5 lakh rupees, and it can be issued at a discount to the face value or on a floating rate basis.✓
- 4CDs can be issued by all scheduled commercial banks and select All-India Financial Institutions, with a minimum maturity of 15 days and a maximum of 3 years.
Correct answer
The minimum amount of a CD should be 5 lakh rupees, and it can be issued at a discount to the face value or on a floating rate basis.
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