Explanation:

Certificate of Deposit or CD is a fixed-income financial instrument governed under the Reserve Bank and India (RBI) issued in a dematerialized form. The amount at payout is assured from the beginning. A CD can be issued by any All-India Financial Institution or Scheduled Commercial Bank. They are issued at a discount provided on face value. Like a fixed deposit (FD), a CD’s purpose is to denote in writing that you have deposited money in a bank for a fixed period and that bank will pay you interest on it based on the amount and duration of your deposit.

Some salient features of CD’s:

• CDs can be issued in India for a minimum deposit of ?1 lakh and in subsequent multiples of it. 
• Scheduled Commercial Banks (SCBs) and All-India Financial Institutions are eligible to issue a CD. Cooperative Banks and RRBs cannot issue a CD. 
• CDs issued by SCBs have in term period anywhere between 3 months to a year.
• CDs issued by financial institutions have a term period ranging from 1–3 years.
• Similar to dematerialized securities, CDs in dematerialized forms are transferable through means of endorsement or delivery.
• There is no lock-in required for a CD.
• One cannot issue a loan against a CD.
• A certificate of deposit is fully taxable under the Income Tax Act.
• A CD cannot be publicly traded.
• Banks are not permitted to buy back a CD before its maturity.