What are Treasury Bills?

Treasury Bills

About Treasury Bills

What are Treasury Bills?

When the government goes to the financial market to raise money, it does so by issuing two types of debt instruments — treasury bills and government bonds. Treasury bills are issued when the government needs money for a short period. These bills are issued only by the central government, and the interest on them is determined by market forces.
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What are maturity period of treasury bills?
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Treasury bills, or T-bills, have a maximum maturity period of 364 days. So, they are categorised as money market instruments (money market deals with funds with a maturity of less than one year). At present, treasury bills are issued in three maturities — 91-day, 182-day and 364-day. In 1997 the government also issued 14-day immediate treasury bills.
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When were treasury bills introduced? Who issues treasury bills and who can buy?
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Treasury bills were first issued in India in 1917. They are issued via auctions conducted by the Reserve Bank of India (RBI) at regular intervals. Individuals, trusts, institutions and banks can purchase T-Bills. But they are usually held by financial institutions. They have a very important role in the financial market beyond investment instruments. Banks give treasury bills to the RBI to get money under repo. Similarly, they can also keep it to fulfil their Statutory Liquid Ratio (SLR) requirements.
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How do T-bills work?
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Treasury bills are issued at a discount to original value and the buyer gets the original value upon maturity. For example, a Rs 100 treasury bill can be availed of at Rs 95, but the buyer is paid Rs 100 on the maturity date. The return on treasury bill depends on liquidity position in the economy. When there is a liquidity crisis, the returns are higher, and vice versa.
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Are T-bills a safe investment instrument?
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Treasury bills have an advantage over other market instruments because of the zero-risk weightage associated with them. The secondary market of T-Bills is very active and they have a higher degree of tradability.

Latest Updates on Treasury Bills

US sanctions 6 individuals, 2 entities; targets N Korea's military funds

2 min read Last Updated :Mar 28 2024 | 8:02 AM IST
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Equity investors make best returns when interest rates decline: UBS

3 min read Last Updated :Feb 28 2024 | 11:04 PM IST
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Liquidity deficit in banks widens to Rs 3.3 trn due to GST outflows

3 min read Last Updated :Jan 24 2024 | 8:28 PM IST
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UK plans new framework to tackle small bank failures after SVB collapse

2 min read Last Updated :Jan 11 2024 | 5:09 PM IST
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Treasury income's contribution to bank P&L's in Q3 to be modest: Analysts

2 min read Last Updated :Jan 02 2024 | 9:45 PM IST
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Treasury bill cut-off yield fall slightly as banking liquidity eases

1 min read Last Updated :Nov 08 2023 | 9:51 PM IST
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Weekly Treasury bills' yield rise as bank liquidity deficit nears Rs 1 trn

2 min read Last Updated :Oct 25 2023 | 10:54 PM IST
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Attractive returns see retail investors prefer T-bills over govt bonds

2 min read Last Updated :Sep 20 2023 | 5:34 PM IST
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Retail investors prefer treasury bills over sovereign govt bonds

3 min read Last Updated :Sep 19 2023 | 7:15 PM IST
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T-bills yield fall on liquidity rise, banks park over Rs 40k cr with RBI

1 min read Last Updated :Aug 30 2023 | 7:44 PM IST
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T-bill auction witnesses firm demand from Mutual Funds, private banks

2 min read Last Updated :Aug 23 2023 | 10:55 PM IST
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T-bills demand softer than previous week on caution ahead of MPC outcome

2 min read Last Updated :Aug 09 2023 | 6:55 PM IST
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Cut-off yield on 364-day Treasury bill up 7 bps as traders resist to invest

1 min read Last Updated :Aug 02 2023 | 11:46 PM IST
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T-bills cut-offs remains steady, as liquidity conditions remain unchanged

1 min read Last Updated :Jul 26 2023 | 5:53 PM IST
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Demand for T-bills softer than expected due to tight liquidity, say dealers

2 min read Last Updated :Jul 12 2023 | 5:03 PM IST
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T-bills auction sees firm demand amid lower supply in quarter ending June

2 min read Last Updated :Jul 05 2023 | 9:33 PM IST
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Treasury-bill auction sees firm demand on hopes of improving liquidity

1 min read Last Updated :Jun 21 2023 | 6:00 PM IST
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Credit Suisse got a $54 bn lifeline, now it needs to win back clients

6 min read Last Updated :Mar 17 2023 | 8:41 AM IST
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Treasury bill yields plunge as SVB collapse affects interest rate view

3 min read Last Updated :Mar 15 2023 | 11:33 PM IST
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Centre concerned about rising T-bill yields, may take remedial measures

2 min read Last Updated :Mar 10 2023 | 9:25 PM IST
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