Certificates of Deposit

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Case Details:

Case Code : FINC065
Case Length : 13 Pages
Period : 2010-2011
Pub. Date : 2011
Teaching Note : Not Available
Organization : -
Industry : -
Countries : India; Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Certificates of Deposit

Certificates of Deposit (CDs) are money market instruments issued by banks in India and abroad in the form of usance promissory notes (Refer to Exhibit III for Certificate of Deposit in Other Countries).

These bank deposits are negotiable, are in marketable form, and have specific face value and maturity periods. They are transferable from one party to another unlike bank term deposits. Due to their negotiable nature, these are also known as Negotiable Certificates of Deposit (NCDs)...

Exhibits

Exhibit I: Fortnightly Certificates of Deposit Issued by Scheduled Commercial Banks
Exhibit II: Stamp Duty Applicable on CDs
Exhibit III: Certificate of Deposit in Other Countries
Exhibit IV: Financial Innovations in India: Balancing the Goals of Growth and Stability
Exhibit V: Guidelines for Issue of Certificates of Deposit (CDs)

Marketing Financial Products
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Case Studies in Finance Vol III

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1] C. Shivkumar, “CD Rates Likely to Plunge as Credit Growth Remains Low,” The Hindu Business Line, November 5, 2009.

2] C. Shivkumar, “Mutual Funds Liquidate CDs to Tackle Redemption Pressure,” The Hindu Business Line, June 7, 2010.

3] The Euro Crisis occurred (?) when the bond yield spreads and risk insurance on credit default swap escalated among member countries of the European Union -- Belgium, Greece, Ireland, Italy, Portugal, and Spain.

4] FIIs are large investors in MFs, particularly in the debt markets schemes. FIIs are not allowed to invest directly in CDs.

5] C. Shivkumar, “Mutual Funds Liquidate CDs to Tackle Redemption Pressure,” The Hindu Business Line, June 7, 2010. During May 2010, Rs. 94.36 billion = US$ 2.4 billion and Rs. 24.50 billion = US$ 535 million.