What is SCD Full Form in Banking?
The SCD full form in Banking is Structured Certificates of Deposits. They are financial securities that indicate a deposit of a specific amount of money for a set length of time. SCD holders, like standard certificates of deposit, are entitled to their principal plus any further payments. Unlike traditional CDs, which typically pay interest at a fixed or floating rate on a regular basis, SCDs may pay an additional payment at maturity or make periodic interest payments on the basis of exchange rates of currency.
Features of SCD:
SCDs are customizable and can be adjusted to meet individual investing goals. Generally, in SCD, the principal amount would be protected, and thus, the investor is guaranteed to receive at least their initial investment after the maturity period. Structured certificates of deposits are more complex than the traditional CDs. This might involve swaps, options, and other derivatives that help generate returns based on the performance of the underlying assets.
Risk factors associated with SCD:
Certain risks are associated with the structured certificates of deposits. When the principle is protected, the return is generally not guaranteed, and it depends on the performance of the linked assets. In some instances, the investor might get only their principal back with no additional return in case the underlying asset performs poorly.
