Ask NiyaTreasury Bills (T-bills) are short-term borrowing instruments issued by the Central Government of India through the Reserve Bank of India (RBI).
They are among the safest money market instruments with zero credit risk, though they offer relatively low returns.
Treasury bills are available in both the primary and secondary markets, and represent a promise to pay a specified sum after a fixed period.
They mature in less than one year and are considered highly liquid.
Following the recommendations of the Committee to Review the Monetary System, a scheme for 182-day Treasury Bills was introduced with flexible interest rates and no rediscounting facility with the RBI. The first auction was held in November 1986.
This instrument aimed to offer an alternative avenue for short-term investment and develop a secondary market.
Due to rising cut-off yields in auctions of 182-day T-bills, the refinance rate was raised:
From 10.25% to 10.75% on March 28, 1989
Further increased to 11.25% on April 16, 1990
To discourage volatility, an additional fee on early rediscounting of 91-day T-bills was introduced in November 1996.
In 1993–94, the weekly auctions of 91-day T-bills raised ₹15,850 crore.
In 1994–95 (up to December 24), ₹11,650 crore was raised through the same.
For 364-day T-bills in fortnightly auctions:
₹20,323 crore was raised in 1993–94
₹16,469 crore in 1994–95
Currently, the Government of India issues three types of T-bills:
91-day
182-day
364-day
State Governments do not issue Treasury Bills.
T-bills are issued at a discount and redeemed at par.
They are issued in a minimum amount of ₹25,000 and in multiples thereof.
Some Treasury Bills are issued under the Market Stabilisation Scheme (MSS).
T-bill auctions are conducted on the Negotiated Dealing System (NDS), where bids are electronically submitted by members.
Non-competitive bids are submitted via custodians or Primary Dealers who are NDS members.
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