1. Bimal Jalan Committee submits report on bank licences
The four-member Bimal Jalan Committee on new bank licences has submitted its report to the Reserve Bank of India (RBI) on February 25, 2014.
Emerging out of a nearly four-hour long meeting in the capital, Jalan confirmed that he had submitted the report.
He however declined to elaborate or comment on the recommendations.
2. What is Certificate of Deposit?
Certificate of Deposit (CD)
A certificate of deposit (CD) is a negotiable money market instrument and issued in dematerialised form or as a Usance Promissory Note issued by a bank. It is a time deposit that restricts holders from withdrawing funds on demand. Although it is still possible to withdraw the money, this action will often incur a penalty.
A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years.
CDs may be issued at a discount on face value. Banks / FIs are also allowed to issue CDs on floating rate basis provided the methodology of compiling the floating rate is objective, transparent and market-based. The issuing bank / FI is free to determine the discount / coupon rate. The interest rate on floating rate CDs would have to be reset periodically in accordance with a pre-determined formula that indicates the spread over a transparent benchmark. The investor should be clearly informed of the same.
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