2. DEFINITION:
MONEY MARKET IS THE MARKET FOR
FINANCIAL ASSETS THAT ARE CLOSE
SUBSTITUTES OF MONEY.
IT IS A MARKET FOR SHORT TERM FUNDS
AND INSTRUMENTS HAVING A MATURITY
PERIOD OF ONE OR LESS THAN ONE
YEAR.
Characteristics of Money Market
It is not a single market but a collection of markets for several
instruments
It is a wholesale market of short term debt instruments
Its principal feature is honour where the credit worthiness of
the participant is important.
It’s a need based market wherein the demand and supply of
The money market is a
mechanism that deals with the
lending and borrowing of short
term funds
3. Functions of money market
Provides a balancing mechanism to even out
demand and supply for short term funds
Provides a focal point for central bank
intervention for influencing liquidity and
general level of interest rates in the economy
Provides reasonable access to suppliers and
users of short term funds to fulfill their
borrowing and investment requirements.
4. Benefits of an efficient money
market
Provides a stable source of funds to banks
Encourage development of non banking
entities
Facilitates Government market borrowing
Makes effective monetary policy actions
Helps in pricing different floating interest
products.
5. The Indian Money Market:
The average turnover of the money market in India is over
40,000 crore daily.
2% of the annual GDP of India gets traded in the money
market in just 1 day
Even though the money market is many times larger than the
capital market, it is not even a fraction of the daily trading in
developed markets.
To ensure liquidity and short term interest rates are maintained at
levels consistent with monetary policy
To ensure adequate flow of credit to the productive sectors of the
economy
To bring about order in the forex market
Role of RBI in Money Market:
7. Treasury
Bills
1
A T-bill is a particular kind
of Finance Bill or
promissory note put out by
the Govt. (A finance bill is a
bill which does not arise
from any genuine
transaction in goods…)
T Bills are short term
instruments issued by the RBI
on behalf of the Govt. to tide
over short term liquidity
shortfalls.
Treasury Bills are
money market
instruments to finance
the short term
requirements of the
Government of India.
These were first issued
in 1917
These are discounted
securities and thus are
issued at a discount to
face value. The return to
the investor is the
difference between the
maturity value and issue
price.
It is issued by the
Central Govt. Though it
were earlier issued by
the state Govts. too until
1950
8. Features
They are negotiable instruments
They are highly liquid
There is no risk of default
They have an assured yield, low transaction cost
There are 92, 182 and 364 day t bills
They are not issued in scrip form (are issued in the form of promissory
note in physical form or by credit to Subsidiary General Ledger (SGL)
account or Gilt account in dematerialised form.)
They are repaid at par on maturity and sold through fortnightly or monthly
auctions at varying discount rate depending upon the bids.
T Bills are available for a minimum amount of Rs. 25000 and in multiples
there off.
All entities registered in India like banks, financial institutions, Primary
Dealers, firms, companies, corporate bodies, partnership firms, institutions,
mutual funds, Foreign Institutional Investors, State Governments, Provident
Funds, trusts, research organisations, Nepal Rashtra bank and even
individuals are eligible to bid and purchase Treasury bills.
Eligible for inclusion in SLR
Repayment : The treasury bills are repaid at par on the expiry of their
tenor at the office of the Reserve Bank of India, Mumbai.
Availability : All the treasury Bills are highly liquid instruments available
both in the primary and secondary market.
Negligible capital depreciation
9. Feature
s
Form
The treasury bills are issued in the form of promissory
note in physical form or by credit to Subsidiary General
Ledger (SGL) account or Gilt account in dematerialised
form.
Minimum Amount Of Bids
Bids for treasury bills are to be made for a minimum
amount of Rs 25000/- only and in multiples thereof.
Eligibility:
All entities registered in India like banks, financial
institutions, Primary Dealers, firms, companies,
corporate bodies, partnership firms, institutions, mutual
funds, Foreign Institutional Investors, State
Governments, Provident Funds, trusts, research
10. Repayment
The treasury bills are repaid at par on the expiry
of their tenor at the office of the Reserve Bank of
India, Mumbai.
Availability
All the treasury Bills are highly liquid instruments
available both in the primary and secondary
market.
Day Count
For treasury bills the day count is taken as 365
days for a year.
11. Calculation of Yield at Maturity
The yield of a Treasury Bill is calculated as per the
following formula:
(100-P)*365*100
Y = ---------------------
P*D
Wherein
Y = discounted yield ; P= Price; D= Days to maturity
12. Example
A cooperative bank wishes to buy 91 Days Treasury Bill Maturing on Dec. 6,
2002 on Oct. 12, 2002. The rate quoted by seller is Rs. 99.1489 per Rs. 100
face values. The YTM can be calculated as following:
The days to maturity of Treasury bill are 55
(October – 20 days, November – 30 days
and December – 5 days)
YTM = (100-99.1489) x 365 x 100
(99.1489*55)
Similarly if the YTM is quoted by the seller
price can be calculated by inputting the
price in above formula.
=5.70
%
13. Types:
On Tap Bills
Ad hoc Bills
Auctioned T Bills
On Tap Bills: are bills that could be bought from
the RBI any time at an interest yield of 4.66%.
They were discontinued from April 1, 1997 as they
lost their relevance.
Types Of Treasury Bills There are different types of
Treasury bills based on the maturity period and utility of
the issuance like, ad-hoc Treasury bills, 3 months,
12months Treasury bills etc. In India, at present, the
Treasury Bills are the 91-days and 364-days Treasury
bills.
Ordinary Ad-hoc
T-Bills
14. Ad-hocs Have been discontinued since 1997. Was first used in 1937
Ad hoc Bills: these were introduced afresh in1955, It was decided
between the RBI and the Govt. of India that the Govt. could maintain
with the RBI a cash balance of not less than 50 crores on Fridays and
4 crores on other days, free of obligation to pay interest thereon. And
whenever the balance fell below a minimum the Govt. a/c would be
replenished by creation of ad hoc bills in favour of RBI.
Adhoc 91d TBs were widely used for replenishment of Govt’s cash
balance with the RBI, which is nothing but an Accounting Measure in
RBI’s books, resulting in automatic monetisation of Govt’s budget
deficit.
They were issued at an unduly low market rate … remained at 4.6%
for many years and became vehicles for automatic monetisation of
budget deficit.
Moreover, In 70 and 80s a large proportion of these bills were
converted into: 1)long term dated and 2)undated securities. They put
15. The Govt. of India entered into an agreement with the RBI on
Sep 9, 1994 to phase out the system of adhocs
The agreement provided:
That at the end of the year 94-95 the net issues should not exceed 6000
crores
That the net issues should not exceed 9000 cr for more than 10
continuous working days during 94-95
If it exceeds the RBI will reduce the excess by auctioning Tbills or
floating Gsecs
Has to be totally discontinued from 97-98
Fresh agreement on March 26, 1997 which provided :
System of adhocs will be discontinued from April 1, 1997
That the outstanding Adhocs & Taps will be converted into special
securities without any specific maturity date at an interest rate of 4.6%
pa.
That a system of “ways and means advance” (WMA) by the RBI to the
GOI will be introduced from April 1, 1997 to accommodate temporary
mismatch in GOI’s receipts and payments.
When 75% of WMA limits is utilised the RBI will trigger fresh issues.
That OD will not be permissible for periods exceeding 10 consecutive
working days
16. Auctioned TBills: They were first introduced in
April 1992. The RBI receives bids from various
participants and issues the bills subject to
some cut-off limits. Thus the yields are market
determined. These bills are neither rated nor
can they be rediscounted with the RBI. At
present RBI issues T Bills of 3 maturities: 91,
182 and 364 days.Types Of Treasury Bills There are different types of Treasury bills
based on the maturity period and utility of the issuance like, ad-hoc
Treasury bills, 3 months, 12months Treasury bills etc. In India, at
present, the Treasury Bills are the 91-days and 364-days Treasury
bills.
17. Importance of T-Bills:
It is central to the growth of money market.
They play a vital role in the cash management of
the Govt.
act as a benchmark and helps in pricing different
floating rate products in the market
It is the preferred central bank tool for market
intervention to influence liquidity and short term
interest rates.
18. Benefits Of Investment In Treasury
Bills
No tax deducted at source
Zero default risk being sovereign paper
Highly liquid money market instrument
Better returns especially in the short term
Transparency
Simplified settlement
High degree of tradability and active
secondary market facilitates meeting
unplanned fund requirements.
19. Primary Market
Treasury Bill Notified amount (Rs
crore)
Day of auction Day of payment
91 day 500 Every Wednesday Following Friday
364 day 1000 Wednesday to coincide with
reporting Friday
Following Friday
In the primary market, treasury bills are issued
by auction technique.
CALENDAR OF AUCTION AS ANNOUNCED
BY RESERVE BANK OF INDIA FOR 2002-03
20. Salient Features Of The Auction
Technique
The auction of treasury bills is done only at Reserve
Bank of India, Mumbai.
Bids are to be submitted on NDS by 2:30 PM on
Wednesday. If Wednesday happens to be a holiday
then bids are to submitted on Tuesday.
Bids are submitted in terms of price per Rs 100. For
example, a bid for 91-day Treasury bill auction could
be for Rs 97.50.
Auction committee of Reserve Bank of India decides
the cut-off price and results are announced on the
same day.
Bids above the cut-off price receive full allotment; bids
at cut-off price may receive full or partial allotment and
bids below the cut-off price are rejected.
21. Difference between Govt. Dated
Securities and T Bills
Both are credit instruments or Securities and
are used to finance the Government’s deficit
T-bills are short-term securities that mature in
one year or less from their issue date.
Government Bonds are long-term (1 year and
above) debt instruments. They are generally
issued for a period of five to thirty years.
Bonds are issued in the name of each holder,
while Treasury Bills are bearer documents
22. TBill Rates:
It is the rate of interest at which TBills are sold by the
RBI.
The effective return on the TBills is the discount at
which they are sold and is based on the difference
between the price at which they are sold and their
redemption value.
It used to be administered as well as the lowest till
1993 .
It increased from 2.52% in 55-56 to 4.60% in 74 but
as per the recommendation of the Chakravarti and
Vaghul Committee the system of fixed rate of discount
of 4.6% was replaced by the system of flexible interest
rate:
92-93: 10.68%
93-94: 7.08-11.10%
94-95: 7.21-11.90%
23. 2
Call/Notice money is the money borrowed or
lent on demand for a very short period. When
money is borrowed or lent for a day, it is
known as Call (Overnight) Money. Intervening
holidays and/or Sunday are excluded for this
purpose. Thus money, borrowed on a day and
repaid on the next working day, (irrespective of
the number of intervening holidays) is "Call
Money". When money is borrowed or lent for
more than a day and up to 14 days, it is
"Notice Money". No collateral security is
required to cover these transactions.
Call/Notice Money
24. Facts & Characteristics of C/N
MM
It is a key segment of the Indian money market
and accounts for the major part of the total
turnover of the money market.
It is a highly liquid market and highly risky as well
It is required mostly by banks - because
Commercial banks need to maintain a minimum
cash balance called CRR and for this they need
inter bank borrowings. In fact this is what has led
to the development of the call money market.
It is basically an over-the-counter (OTC) market
without the intermediation of the brokers.
25. What is CRR?
CRR is a technique for monetary control effected by RBI for achieving specific
macro-economic objective/s like maintaining desired level of inflation, growth
exchange rates etc.
CRR refers to the cash that banks have to maintain with the RBI as a certain % of
their total demand and time liabilities (DTL). It is about 9% July-Aug 08
Prior to May2000, banks were required to maintain 85% of their fortnightly reserve
requirements on a daily basis. But because of low branch networking it wasn’t
possible to report the NDTL in time.
To bring in more flexibility in the system, a lagged reserve maintenance system
was introduced in Nov 99 whereby, banks were allowed to maintain reserve
requirements on the basis of the last Friday of the 2nd (instead of 1st) preceding
fortnight.
From May 6, 2000 this requirement of 85% balance on the first 13 days was
brought down to 65%. From Aug 11, 2000 it was brought down to 50% for the first
7 days of the reporting fortnight while maintaining 65% for the remaining 7 days
including the reporting Friday.
The daily minimum CRR was reduced to enable the smooth adjustment of liquidity
Hence, once every fortnight on a reporting
Friday banks have to satisfy reserve
requirements which often involves borrowing
in the call/notice money market.
26. Participants in the call money
L
E
N
D
E
R
S
&
B
O
R
R
O
W
E
R
S
Was predominantly an inter-bank market till 1971 when
UTI & LIC were allowed to operate as lenders
Until 1978 brokers were also allowed
90s the participation was gradually widened to include
DFHI (Disc & fin hs of India ltd.), STCI, GIC, NABARD,
IDBI, MMFs. Corporates, Pvt. Sector Mutual Funds etc
as lenders in this market.
Who plays the role of both lenders and borrowers are
scheduled and non-scheduled commercial banks,
foreign banks, state, district and urban cooperative
banks, DFHIs
1996-97 even Primary dealers have been allowed
L
E
N
D
E
R
S
From August 6, 2005 call money market is now a pure inter-
bank money market
27. Reporting of call/Notice Money Transaction: In order to
improve transparency reporting of call or notice money
market transactions on the NDS(Negotiated Dealing
System) was made compulsory w.e.f May 3rd, 2003 ->
Any transaction whether executed on the NDS or
outside it or whether the counter member is a member
of NDS or not is to be reported on the NDS.
Role of RBI in the Call Money Market: In 2 ways:
By providing lines of finance (additional funding) to the DFHIs and other call
money dealers &
By conducting REPO auctions (This increases liquidity in the market and
brings down call money rates) Reverse Repo absorbs excess liquidity
Link between call money market and other Financial
Markets:
CALL rates and Short term money market instruments
If it goes up banks resort to CDs; if it goes down banks funds CPs
Investment in Govt. Securities
28. MIBOR
The NSE (National Stock Exchange) developed and launched the:
NSE Mumbai Inter-bank Bid Rate (MIBID) &
NSE Mumbai Inter-bank Offer Rate (MIBOR) for overnight money markets on
June 15, 1998
Both are based on rates pooled by the NSE from a representative
panel of 31banks/institutions or PDs (Reuters MIBOR [Mumbai
Inter-bank Overnight Average] is arrived at by obtaining a weighted
average of call money transaction of 22 banks and other players.)
PROCESS:
Currently, quotes & rates are pooled and processed daily by the
exchange at 9:40 (IST) for overnight rates & 11:30 (IST) for 14d/1m/24m
rates
The rates pooled are then processed using the Bootstrap method to
arrive at an efficient estimate of the reference rates.
This rate is used as a benchmark rate for majority of deals struck for
floating rate debentures and term deposits. (the benchmark is the rate at
which money is raised at the financial markets)
These rates are used in hedging strategies and as reference points in
forwards and swaps also.
29. 1. On a typical day, 20 dealers are polled at random from a
panel of 30.
2. Each dealer is asked to report the best borrow/lend rates at
Rs.10 crore. Some dealers, e.g. UTI, only report best lend
rates.
3. The bootstrap is used to obtain inference for trimming zero to
four extreme observations. This is used to choose a “best” k.
The bootstrap additionally gives a sampling standard
deviation.
4. Two rates are reported: MIBID and MIBOR, and each is
accompanied by a standard deviation.
Implicit in these is an additional time–series for the bid–ask
spread at Rs.10 crore on the call money market.
(http://www.mayin.org/˜ajayshah)
More on MIBOR (How is it
done?)
Bootstrapping is the practice of
estimating properties of an
estimator (such as its variance) by
measuring those properties when
sampling from an approximating
30. Factors influencing call money
market rate:
Liquidity conditions (d/s > dep mob, rsv rqmts/ taxation, govt
borrw)
Reserve requirement stipulations (cut in crr increases call
rates)
Structural Factors ( govt legislations, cond of stock mkt)
Investment policies of NB participants
Liquidity changes and gaps in FOREX markets (call rates inc
during volatile forex conds.)t
Measures for curbing high volatility:
Increasing the number of participants
Through Repo options by RBI
Freeing the inter-bank liabilities by easing reserve
requirements
Investment policies of NB participants
Size of the call money market
31. 3
A commercial paper is an unsecured short term promissory
note issued at a discount by credit worthy corporates, primary
dealers and all India financial institutions. (Was introduced in
India in Jan 1990)
Characteristics:
It is an unsecured short term promissory note.
It is negotiable and transferable by endorsement and delivery
with a fixed maturity period
CPs are normally issued in multiples of five Lakhs (therefore min
is 5 lakhs) for 30/45/60/90/120/180/270/364 days.
Generally issued at a discount by leading creditworthy and highly
rated corporates to meet their working capital requirements
Companies can issue CPs either directly to the investors or
through banks/merchant banks (called dealers).
Depending upon the company the CPs is also known as a
finance paper or an industrial paper.
CPs have to be compulsorily rated by a recognized credit rating
agency, companies can issue CPs only if they have a short term
Commercial Paper
32. A company issues CPs to save on interest costs i.e. it issues CPs only when the
situation is such that CP rates are lower than the rate at which it borrows money
from its banking association.
Corporates are allowed to issue CPs up to 100% of their fund based working
capital limits
The paper attracts stamp duty
No prior approval of the RBI is required to issue a CP and underwriting the issue
is also not mandatory.
A CP is issued as an unsecured promissory note or in a dematerialized form at a
discount which is freely determined by market forces. The paper is usually priced
between the lending rate of SCBs and a representative money market rate. (as
represented by CDs and TBs)
A CP can be issued to individuals, banks, companies and other registered Indian
corporate & unincorporated bodies. NRIs can be issued a CP only on a non-
transferable and non-repatriable basis. Banks are not allowed to underwrite or co-
accept the issues of a CPs
Banks are the main lenders of this market, call markets affect CP rate; lower call
rates mean cash surplus, banks scrutinize CPs as an alternate investment route.
Higher call rates also discourage corporates form issuing CPs as it leads to
higher cost of funds.
33. The process of issuing a CP
A resolution is passed by the BOD approving the CP issue as per
the RBI norms
The issue then has to be rated by a credit rating agency (is
completed within 2-3 weeks
The company has to select an issuing and paying agent (IPA) which
has to be a scheduled bank.
The IPA verifies all the documents and minimum credit rating
stipulations
Then the company has to arrange for dealers such as merchant
bankers, brokers and banks for placement which has to be
completed within 2 weeks of opening.
Every CP issue has to be reported to the RBI through the IPA
SCBs are major investors in CPs as banks prefers investing in CPs
because sanctioning loans block up the funds for a longer time
period.
34. As per the annual report 2008 published by RBI, the total outstanding amount of
commercial papers issued by Corporates increased from INR 17,863 Crores
(March 2007) to INR 50,062 Crores (January 2008) – a 180% increase in a
period spanning 10 months. Although, seasonal year-end redemptions led to a
decline in the figures in March 2008 with outstanding amount at INR 32,592
Crores (a y-o-y increase of 82.45%). July 2008 saw the issuance of CPs
reaching INR 51,569 Crores. The report also observes that the fortnightly
average issuance of CPs during 2007-08 was INR 4,153 Crores as compared to
INR 2,322 Crores during 2006-07.
35. The Weighted Average Discount Rate (WADR) on CPs declined from 11.33% on
March 31, 2007 to 7.65% at end-October 2007 but hardened to 10.38% as on
March 31, 2008 and further to 10.95% as on July 31, 2008. The most preferred
tenor of CP issuance was for period 180 days and above.
36. In terms of non-SLR Investments made by Scheduled Banks, observing figures for the
year 2007 indicate that Commercial Papers constituted 9.4% (at INR 8,978 Crores) of
the total non-SLR investments made, as compared to its preceding year at 5.4% (INR
4,821 Crores). Bonds/Debentures still remain the biggest avenue although their share
has been a reasonable decline over the past four years. Shares and Mutual Funds are
the other two destinations where the banks are routing their non-SLR investments.
37. Some Examples of CP issuers:
In the recent past, prominent corporates like:
Power Finance Corporation
Rural Electrification Corporation
Tata Power, Tata Motors
Simplex Infrastructure
IDFC etc.
have been observed raising short-term funds
through commercial papers (CPs) and
debentures.
38. Commercial Bills4
Trade bills are
called
Commercial Bills
A commercial bill is a short term, negotiable and self
liquidating instrument with low risk.
It is a negotiable instrument drawn by the seller on the
buyer for the value of goods delivered to him (and are
called Trade Bills.) These are, in turn, accepted and
discounted by commercial banks and when such bills are
accepted by the commercial banks they are called
Commercial Bills.
The banks discounts this bill by keeping a certain margin
and credits the proceeds.
The Commercial banks in turn, if they need money, gets
these bills rediscounted by financial institutions like LIC,
UTI, GIC, ICICI and IRBI.
The maturity period of the bills varies from 30ds – 60ds –
39. Types of Commercial Bills
Demand Bill / Usance Bill
Clean Bill / Documentary Bill
Inland Bill/ Foreign Bill - Export Bill/Import Bill
Hundi
Derivative usance promissory notes
40. Demand Bill / Usance Bill: A demand bill is payable on
demand, i.e., immediately at sight or on presentation
to the drawee. A usance bill is payable after a
specified period of time.
Clean Bill / Documentary Bill: In a Clean Bill
documents are enclosed and delivered against
acceptance by the drawee after which it becomes
clear. & in case of Documentary Bill documents are
delivered against payment accepted by the drawee
and documents of the file is held by the banker till the
bill is paid.
Inland / Foreign Bills: Inland bills must be (a) drawn or
made in India and must be payable in India (b) drawn
upon any person resident in India. Foreign bills on the
other hand are (a) drawn outside India and may be
payable in and by a party outside India, or may be
payable in India or drawn on a party in India or (b) It
may be payable in India and payable to a party
41. A bill of lading is a document
issued and signed by a
transportation company to
show receipt of goods for
transportation from and to the
point of destination.
A clean bill of lading, simply
put, is when the goods
received by the carrier
(transportation company) are
in appropriate condition with
no defects or damage to
goods and/or packaging. If,
for example, the container
received by the carrier was
damaged, the carrier makes a
notation that expressly
declares the defective
A documentary bill Is used
when the seller of goods to a
customer abroad wishes to
obtain payment or some form of
security before the goods are
actually delivered.
When drafts are
deliverable only upon
acceptance, the draft is
known as a documentary
acceptance bill; when
deliverable only upon
payment, the draft is called
a documentary payment
bill.
42. With a view to eliminating movement of papers and facilitating
multiple rediscounting, the RBI introduced an innovative
instrument known as "Derivative Usance Promissory Notes"
backed by such eligible commercial bills for required amounts
and usance period (up to 90 days). Government has exempted
stamp duty on derivative usance promissory notes. This has
indeed simplified and streamlined the bill rediscounting by
Institutions and made commercial bill an active instrument in the
secondary money market. Rediscounting institutions have also
advantages in that the derivative usance promissory note, being
a negotiable instrument issued by a bank, is good security for
investment. It is transferable by endorsement and delivery and
hence is liquid. Thanks to the existence of a secondary market
the rediscounting institution can further discount the bills anytime
it wishes prior to the date of maturity. In the bill rediscounting
market, it is possible to acquire bills having balance maturity
period of different days upto 90 days. Bills thus provide a smooth
glide from call/overnight lending to short term lending with
security, liquidity and competitive return on investment. As some
43. Import / Export Bills: Export bills are drawn by
exporters in any country outside India and Import bills
are drawn on importers in India by exporters abroad.
Hundi: It is an indigenous variety of BOE for financing
the movement of agricultural produce. It has a long
tradition of use in India and is in vogue among
indigenous bankers for raising money or remitting
funds or to finance inland trade. Indigenous bankers
have so far dominated the bill market but with the
reforms in the financial system and lack of private
funds, their role is on a decline.
Derivative usance promissory notes: These are notes
introduced by the RBI with a view to eliminating
movements of papers and facilitating multiple
rediscounting. These are backed by eligible
commercial bills for the required amounts and a
usance period (up to 90 ds.) The Govt. has exempted
stamp duty on DUPNs. (the min period of
44. Features of CBs in India
CBs ensure improved quality of lending, liquidity
and efficiency in money management.
It is fully secured for investment since it is
transferable by endorsement and delivery and it
has a high degree of liquidity.
The bill market is highly developed in industrial
countries but it is very limited in India.
CB rediscounted by commercial banks with Fis
amount to less than 1000 cr.
In India the bill market is not developed due to (i)
the cash-credit system of credit delivery (where
the onus of cash management rests with the
banks) (ii) an absence of an active secondary
market.
45. Certificates of Deposits
CDs are unsecured, negotiable, short term instruments in
bearer form issued by Commercial Banks and DFIs.
CDs were introduced from June 89. Only SCB excluding
RRBs and local area banks were allowed to issue them
initially. FIs were permitted to issue CDs within the limits fixed
by RBI in 1992.
CDs are time deposits of specific maturity similar to FDs. The
biggest difference is CDs are in bearer form and are
transferrable and tradable whereas FDs are not.
CDs are subject to CRR and SLR requirements. There is no
ceiling on the amount that can be raised by the banks.
The deposits attracts stamp duty and can be issued to
individuals. Corporations, trusts, companies, funds,
associates an others.
