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Issue of Certificates of Deposit (CDs) in Dematerialised Form
DBS.
FID. C-15 - 02.01.00 dated 29th April 2002
Please
refer to the paragraph No 91 of the Governor�s statement on �Monetary and
Credit Policy for the year 2002-03� announced on April 29, 2002 available in
our website www.rbi.org.in (copy of the extract of paragraph No 91 enclosed). In
accordance with the policy announcements, the following measure is being
introduced with immediate effect.
2.
The Reserve Bank of India has issued guidelines for Commercial Paper (CP)
in consultation with the market players including the standard procedures and
documentation to be followed by the participants in the Commercial Paper (CP)
market. In April 2001, instructions were issued to banks and FIs that they
should make investments and hold CPs only in the dematerialised form without
prejudice to the provision of Depositories Act, 1996 and convert existing
outstandings also into demat form by October 31, 2001. It has now been decided
that standard procedures and guidelines for issuing Certificates of Deposit
(CDs) may also be prepared for the benefit of issuers of CDs. Accordingly, Fixed
Income Money Market and Derivatives Association (FIMMDA) has prepared the
guidelines and documentation procedures in consultation with market
participants, depositories and RBI. Pending release of final guidelines and as a
further step towards transparency, it has been decided that with effect from
June 30, 2002, FIs should issue CDs only in the dematerialized form. The
existing outstandings of CDs shall be converted into the dematerialised form by
October 2002.
3.
Please acknowledge receipt.
An
Extract of paragraph No.91 from the Statement by Dr. Bimal Jalan, Governor,
Reserve Bank of India on Monetary and Credit Policy for the year 2002-03,
announced on April 29, 2002.
Certificates of Deposit
91.
Several developments in financial market have so far been undertaken by
RBI, which include issuing of guidelines for Commercial Paper (CP) in
consultation with the market players. Subsequently, Fixed Income Money Market
and Derivatives Association (FIMMDA) was requested to prepare the necessary
standard procedures and documentation to be followed by the participants in the
CP market. Such guidelines were issued by FIMMDA in June 2001. Further, as
announced in the annual policy Statement of April 2001, instructions were issued
to banks and FIs that they should make investments and hold CPs only in the
dematerialised form and convert existing outstandings also into demat form by
October 31, 2001. It was felt that on similar lines standard procedures and
guidelines for issuing Certificates of Deposit (CDs) may also be prepared for
the benefit of issuers of CDs. Accordingly, FIMMDA has prepared the guidelines
and documentation procedures in consultation with market participants,
depositories and RBI. Pending release of final guidelines and as a further step
towards transparency, it has been decided that:
?
With effect from June 30, 2002, banks and FIs should issue CDs only in
the dematerialised form. The existing outstandings of CDs shall be converted
into the demat form by October 2002.
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