Question

A Scheduled Commercial Bank wishes to issue Certificates of Deposit (CDs) to raise short-term resources. According to financial guidelines, which of the following criteria must the bank strictly adhere to?

Q: Answer-A Scheduled Commercial Bank wishes to issue Certificates of Deposit (CDs) to raise short-term resour...

Regulations stipulate that Certificates of Deposit CDs must be executed solely in a dematerialized format with an approved SEBI depository. They carry a minimum face value denomination of 5 lakh and multiples of 5 lakh thereafter , a minimum tenor of 7 days, a maximum tenor of 1 year , and banks are restricted from granting loans against them unless permitted by the RBI.

A CDs must be issued in physical paper format and carry a minimum maturity of 2 years.

B CDs can be issued for a minimum denomination of ₹1 lakh and any odd multiple thereafter.

C The bank can freely grant standard commercial credit loans against the security of its issued CDs.

D CDs must be issued in a minimum denomination of ₹5 lakh in dematerialized form, with an issuance tenor between 7 days and 1 year.

E The settlement cycle for over-the-counter trades in CDs must strictly follow a T+5 clearing framework.

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A Scheduled Commercial Bank wishes to issue Certificates of Deposit (CDs) to raise short-term resources. According to financial guidelines, which of the following criteria must the bank strictly adhere to?

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