Certificates of Deposit

a) CDs are negotiable money market instrument issued in demat form or as a Usance Promissory Notes.

b) CDs issued by banks should not have the maturity less than seven days and not more than one year.

c) Financial Institutions are allowed to issue CDs for a period between 1 year and up to 3 years.

d) CDs are like bank term deposits but unlike traditional time deposits these are freely negotiable and are often referred to

as Negotiable Certificates of Deposit.

e) CDs normally give a higher return than Bank term deposit. 

f) All scheduled banks (except RRBs and Co-operative banks) are eligible to issue CDs.

g) CDs are issued in denominations of Rs. 1 Lac and in the multiples of Rs. 1 Lac thereafter.

h) Discount/Coupon rate of CD is determined by the issuing bank/FI.

i) Loans cannot be granted against CDs and Banks/FIs cannot buy back their own CDs before maturity

Treasury bills

a) Treasury Bills are short term (up to one year) borrowing instruments of the Government of India which enable investors to park their short term surplus funds while reducing their market risk.

b) They are auctioned by Reserve Bank of India at regular intervals and issued at a discount to face value.

c) Any person in India including Individuals, Firms, Companies, Corporate bodies, Trusts and Institutions can purchase

Treasury Bills.

d) Treasury Bills are eligible securities for SLR purposes.

e) Treasury Bills are available for a minimum amount of Rs. 25,000 and in multiples of Rs. 25,000 thereafter.

f) At present, RBI issues T-Bills for three different maturities: 91 days, 182 days and 364 days.

Cash Management Bills (CMBs)

a) Government of India, in consultation with the Reserve Bank of India, has decided to issue a new short-term instrument, known as Cash Management Bills (CMBs), to meet the temporary mismatches in the cash flow of the Government.

b) The CMBs have the generic character of T-bills but are issued for maturities less than 91 days. 

c) Like T-bills, they are also issued at a discount and redeemed at face value at maturity.

d) The tenure, notified amount and date of issue of the CMBs depends upon the temporary cash requirement of the Government.