CBDC pilot initiatives for CPs and CDs are anticipated to RBI

RBI Governor Shaktikanta Das announced plans for a pilot programme aimed at the wholesale market of Central Bank Digital Currency (CBDC), specifically commercial papers (CPs) and certificates of deposits (CDs). 

About Commercial Papers (CPs) and Certificates of Deposits (CDs)

Commercial PapersCertificates of Deposits
Type of InstrumentUnsecured promissory noteFixed-income financial instrument
IssuerLarge corporations, primary dealers, financial institutionsScheduled Commercial Banks, All-India Financial Institutions
Maturity Period1 to 364 days3 months to 1 year (for SCBs), 1 to 3 years (for financial institutions)
Minimum InvestmentRs. 5 lakh or multiples thereofRs. 1 lakh or multiples thereof
Credit Rating RequirementThe minimum credit rating necessary (e.g., A-2) from recognised rating agenciesTypically issued by high-rated banks and financial firms.
CollateralUnsecuredNot applicable
PurposeShort-term funding for corporationsIndividuals and institutions make short- to mid-term investments.
Interest RateTypically higher than bonds, varies according to market circumstances.Typically fixed, greater than savings accounts, varies with market circumstances.
Investment EligibilityIndividuals, banks, corporate organisations (registered or incorporated in India), non-resident Indians, foreign institutional investors, and so on.Individuals, banks, other corporations, non-resident Indians, foreign institutional investors, and so on.
Issuing and Paying Agent (IPA)Only scheduled banks serve as issuing and paying agents.Not applicable
TradingActively traded in the Over-the-Counter (OTC) market; reported on the Fixed Income Money Market and Derivatives Association of India (FIMMDA) reporting platform.Not publicly traded
Dematerialized HoldingCan be kept in dematerialized form through SEBI-approved depositories.Can issue in dematerialized form through SEBI-approved depositories.

Leave a Reply

Your email address will not be published. Required fields are marked *

And get notified everytime we publish a new blog post.