IFSCA issues Guidelines for issuance of Certificate of Deposits

Jul 22, 2021 | by Avantis RegTech Legal Research Team

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Industry Specific Compliance

The International Financial Services Centres Authority (IFSCA) on July 20, 2021 has issued Guidelines for issuance of Certificate of Deposits. The Certificate of Deposit (CD) is a negotiable instrument and issued in dematerialised form or as a Usance Promissory Note against funds deposited at a BU for a specified time period.

• IBUs may issue CDs denominated in any freely convertible foreign currency.

• Minimum amount of a CD should be USD 2500 or equivalent in any freely convertible foreign currency.

• BUs may issue CDs to persons resident in India and persons resident outside India. 

• The issued maturity period of CDs by BUs should not be less than 7 days and not more than one year, from the date of issue. 

• IBUs may issue CDs at a discount on face value or based on fixed or floating coupon rate.

• IBUs have to maintain appropriate reserve requirements, i.e., Retail Deposit Reserve Ratio (RDRR) on the issue price of the CDs issued to individuals.

• CDs may be issued in physical form or in demat form.

• CDs in physical form are freely transferable by endorsement and delivery.

• IBUs shall clearly inform subscribers that the CDs issued by them are not covered by Deposit Insurance and also that the lender of Last resort (LOLR) facility is not available in IFSC.

• IBUs shall not grant loans against CDs.

• IBUs are permitted to buyback CDs before maturity.

• The physical certificates may be presented for payment by the last holder.

• IBUs shall provide any information/ data or statement that may be called for by the Authority. 

• IBUs are directed to ensure compliance with the provisions of this circular. 

[Notification No- 110/IFSCA/Banking Regulation/2021-22/5]

 

 


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