IFSCA Guidelines for issuance of Certificate of Deposits

Last updated: 12 May 2021

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The International Financial Services Centres Authority (IFSCA) has issued new guidelines for Banking Units (BUs) regarding the issuance of Certificates of Deposit (CDs). These CDs are negotiable instruments, available in dematerialised or promissory note form, against deposited funds. BUs can issue CDs in any convertible foreign currency, with a minimum amount of USD 2500 or equivalent, and they can be issued to both residents and non-residents of India. The maturity period ranges from 7 days to one year, with no lock-in period beyond the minimum maturity. BUs must inform investors that CDs are not covered by deposit insurance and are not eligible for the lender of last resort facility.

International Financial Services Centres Authority F.No.110/IFSCA/Banking Regulation/2021-22/2 May 10 , 2021 To All Banking Units Dear Sir/Madam, Subject: Guidelines for issuance of Certificate of Deposits Certificate of Deposit (CD) is a negotiable instrument and issued in demater

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FAQ :

A Certificate of Deposit (CD) is a negotiable instrument issued in dematerialised form or as a Usance Promissory Note against funds deposited at a Banking Unit (BU) for a specified time period.

The minimum amount for a CD is USD 2500 or its equivalent in any convertible foreign currency.

CDs can be issued to persons resident in India and persons resident outside India, as defined by the Foreign Exchange Management Act, 1999. Qualified Individuals (QI) or Qualified Resident Individuals (QRI) are not applicable for investment in CDs.

The maturity period for CDs issued by BUs must be between 7 days and one year from the date of issue. There is no lock-in period other than the minimum maturity period.

No, BUs must clearly inform subscribers that the CDs issued by them are not covered by Deposit Insurance.

No, BUs shall not grant loans against CDs and cannot buy back their own CDs before maturity.