What are Inter Corporate Deposits (ICDs)?

Inter Corporate Deposits indicates relaxed short term sponsorship raised by one company from another company. They're dependent on private connections.

 These are of three types

Call Deposit

Such a type of deposit is withdrawn by the lender by giving a notice of one day. Notwithstanding, in practice, a lender has to bide for at least 3 days.

Three-month Deposit

As the name suggests, like type of a deposit provides pocket for three months to meet up short- term cash inadequacy.

Six-month Deposit

The lending company provides pocket to another company for a period of six months.

Features of Inter-corporate Deposits

 The important features of inter-corporate deposits are as follows

 It's a popular source of short- term finance.

 Procurement procedure is simple.

 The rate of interest on like deposits isn't fixed. It depends upon the quantum involved and the term of lending.

 It's uncertain source of finance, as deposit can be withdrawn any time — so it's perilous also.

 Advantages of Inter-Corporate Deposits

 Supererogatory pocket can be effectively harnessed by the lender company.

Like deposits are secured in nature.

Inter-corporate deposits can be freely got.

Disadvantages of Inter-Corporate Deposits

The demand for like source of sponsorship isn't structured.