Treasury Bills

News: India has renewed a USD 50 million Treasury Bill for the Maldives through the State Bank of India (SBI), extending financial assistance for another year. Treasury Bills

About Treasury Bills

• Treasury Bills (T-Bills) are short-term debt instruments issued by the Reserve Bank of India (RBI) on behalf of the Government of India (GOI).
• They are issued in the form of promissory notes to meet the short-term funding needs of the central government.
• They are part of the broader monetary and fiscal policy tools used to regulate liquidity and interest rates in the economy.
• Banks use T-Bills for Repo transactions with RBI and maintaining SLR (Statutory Liquidity Ratio)
• It is known for their high liquidity and low risk, T-Bills are among the safest investment options in the market.
• Treasury Bills are issued via auctions conducted by RBI on its electronic platform E-Kuber.
• Participants include: Banks, Primary dealers, Institutional investors and Individuals (can also invest directly via RBI Retail Direct)
• The minimum investment required in T-Bills is Rs. 10,000. Further investments must be in multiples of Rs. 10,000.
• On maturity, the face value is automatically credited to the investor’s account.

Key Features of Treasury Bills

1. Zero-Coupon Instrument: T-Bills do not offer periodic interest payments. They are issued at a discounted price and redeemed at face value, with the difference being the investor’s return.

2. Short-Term Maturity: T-Bills are issued with fixed tenures: 14 days, 91 days, 182 days and 364 days. Their short duration provides quick liquidity, making them ideal for short-term investors.