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Scheduled commercial banks, regional rural banks, and small finance banks issue certificates of deposit to persons resident in India in dematerialized form. The minimum denomination is five lakh rupees and multiples of five lakh rupees thereafter. The tenor is between seven days and one year. Issuers issue certificates of deposit on a T plus one basis. Issuers report primary issuance details and buyback details to the trade repository by 5:30 PM on the transaction day. Counterparties report secondary market transactions within 15 minutes of execution on the F-TRAC platform. Depositories report holding details to the Reserve Bank at fortnightly intervals. These directions come into force on June 7, 2021.
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RBI/2021-22/79 FMRD.DIRD.03/14.01.003/2021-22 June 4, 2021 To, All Eligible Market Participants Madam/Sir, Master Direction – Reserve Bank of India (Certificate of Deposit) Directions, 2021 Please refer to Paragraph 6 of the Statement on Developmental and Regulatory Policies , announced as a part of the second Bi-monthly Monetary Policy Statement for 2019-20 dated June 06, 2019 regarding Comprehensive Review of Money Market Directions. A reference is also invited to Paragraph 5 of the Statement on Developmental and Regulatory Policies , announced as a part of the second Bi-monthly Monetary Policy Statement for 2021-22 dated June 04, 2021 on ‘Facilitating Flexibility in Liquidity Management by issuers of Certificates of Deposit’.
Yours faithfully,
(Dimple Bhandia) Chief General Manager
FINANCIAL MARKETS REGULATION DEPARTMENT
Notification No. FMRD.DIRD.04/14.01.003/2021-22 dated June 04, 2021
Master Direction – Reserve Bank of India (Certificate of Deposit) Directions, 2021
In exercise of the powers conferred under section 45W of the Reserve Bank of India Act, 1934 (hereinafter called the Act) read with section 45U of the Act and of all the powers enabling it in this behalf and in supersession of Section III of FMRD.Master Direction No. 2/2016-17 dated July 07, 2016 , the Reserve Bank of India (hereinafter called the Reserve Bank) hereby issues the following Directions to all persons and agencies eligible to deal in Certificate of Deposit.
“Benchmark Interest Rates” means interest rates administered by Financial Benchmark Administrators;
“Certificate of Deposit” or “CD” is a negotiable, unsecured money market instrument issued by a bank as a Usance Promissory Note against funds deposited at the bank for a maturity period upto one year;
“Delivery versus Payment” or “DvP” means a settlement mechanism which stipulates that transfer of funds from the buyer of securities is made simultaneously with the transfer of securities by the seller of securities;
“Depository” shall have the meaning assigned in section 2 (e) of the Depositories Act, 1996 (22 of 1996);
“Electronic Trading Platform” or “ETP” shall have the meaning assigned in paragraph 2 (1) (iii) of the Electronic Trading Platform (Reserve Bank) Directions, 2018 dated October 05, 2018 as modified from time to time;
“Financial Benchmark Administrator” or “FBA” means a person who controls the creation, operation and administration of financial benchmark(s) authorized under Financial Benchmark Administrators (Reserve Bank) Directions, dated June 26, 2019 ;
“Over-the-Counter markets” or “OTC markets” refers to markets where transactions are undertaken in any manner other than on exchanges and shall include those executed on electronic trading platforms;
“Person resident in India” shall have the same meaning assigned to it in section 2 (v) of the Foreign Exchange Management Act, 1999;
“Recognised stock exchanges” shall have the meaning assigned in section 2 (f) of the Securities Contract Regulation Act, 1956;
“Small Finance Bank” means a bank licensed under section 22 of the Banking Regulation Act, 1949 and governed by the terms of the “Reserve Bank Guidelines for Licensing of Small Finance Banks” dated November 27, 2014 , as amended from time to time.
Eligible investors CDs may be issued to all persons resident in India.
General guidelines
Obligation to provide information sought by the Reserve Bank The Reserve Bank may call for any information or statement or seek any clarification, which in the opinion of the Reserve Bank is relevant, from persons or agencies dealing in the CDs, including eligible issuers/ investors and such persons, agencies and participants shall furnish the information, statement or clarification.
Dissemination of data The Reserve Bank or any other person authorised by the Reserve Bank, may publish any anonymised data related to transactions in primary and secondary markets in CDs.
Violation of Directions In the event of any person or agency violating any provision of these Directions or the provisions of any other applicable law, the Reserve Bank may, in addition to taking any penal or regulatory action in accordance with law, disallow that person or agency from dealing in the CD market for a period not exceeding one month at a time, after providing reasonable opportunity to the person or agency to defend its actions, and such action will be made public by the Reserve Bank.
Applicability of other laws, directions, regulations or guidelines Participants in CD market shall abide by the provisions of any directions, regulations or guidelines issued by any regulator or any other authority that may be applicable, in respect of issue of or investment in CDs provided that such directions, regulations or guidelines do not conflict with these Directions. In case of any conflicts, the provisions of these Directions shall prevail.
These Directions shall apply to the transactions in Certificate of Deposit entered into from the date these Directions come into force. Provisions of Section III of FMRD.Master Direction No. 2/2016-17 dated July 07, 2016 shall continue to be applicable to the CDs issued in accordance with the said Directions till the maturity of those CDs.
