Economics • Banking & FinanceMedium
Which of the following defines a 'Certificate of Deposit (CD)' in the Indian money market?
A. A negotiable term deposit receipt issued by a commercial bank or financial institution in dematerialized form.✓ Correct Answer
B. An equity share issued by a public sector bank during a follow-on public offer.
C. A long-term bond issued by municipal corporations for urban infrastructure.
D. An unsecuritized retail debt instrument issued by non-banking financial companies.
💡 Solution & Explanation
A Certificate of Deposit is a negotiable money market instrument issued by scheduled commercial banks and select financial institutions against term deposits held in dematerialized form. It provides institutional investors and corporations with a flexible short-term investment avenue that can be traded in the secondary market before maturity. Money market instruments are recurrently featured in Indian economy and banking syllabi.
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