Skip to main content

What are Treasury Bills (T-bills)?

Governments raise / borrow funds by issuing government securities to finance a variety of projects and activities.

What is Government Security (G-Sec)?

Government Security (G-Sec) is a tradeable instrument issued by the Central Government or the State Governments. 

G-Secs carry practically no risk of default and, hence, are called risk-free gilt-edged instruments.

What are the types of G-Secs?

Government security Term Issued by
Treasury Bills (T-bills) Short-term Central Government
Cash Management Bills (CMBs) Short-term Central Government
Bonds or Dated G-Secs Long-term Central Government
State Development Loans (SDLs) Long-term State Governments

What are Treasury Bills (T-bills)?

Debt obligations of the Government that have maturities of one year or less are normally called Treasury Bills or T-Bills.

What are the features of T-bills?

  • T-bills are money market instruments.
  • T-bills are short-term debt instruments issued by the Government of India.
  • T-bills are issued in 3 tenors, namely, 91 day, 182 day and 364 day.
  • T-bills are zero coupon securities and do not earn any interest. Instead, they are issued at a discount and redeemed at the face value at maturity. For example, T-bill of ₹100/- (face value) issued at ₹ 98.20, that is, at a discount of ₹1.80 and redeemed at the face value of ₹100/-. 

Auction and Settlement of T-bills

  • Reserve Bank of India (RBI) releases a quarterly calendar of T-bill issuances for the upcoming quarter in the last week of the preceding quarter. For example, calendar for April-June period is notified in the last week of March.
  • The auctions of T-bills are held every Wednesday.
  • The minimum bid amount for T-bills is ₹10,000 and in multiples thereof.
  • Bids can be places by investors under both Competitive Bidding and Non- Competitive Bidding. The aggregate allocation of all non-competitive bids is restricted to a maximum of 5% of the aggregate nominal amount of the issue within the notified amount.
  • Settlement for the T-bills auctioned is made on T+1 day i.e. on the working day following the trade day. On the settlement date, the fund accounts of the participants are debited by their respective consideration amounts and their securities accounts are credited with the amount of securities allotted to them. 


References

Reserve Bank of India. (2020, April 01). 'Government Securities Market in India – A Primer'. Retrieved from https://www.rbi.org.in/Scripts/FAQView.aspx?Id=79


Follow at - Telegram   Instagram   LinkedIn   Twitter

Labels:

Comments

Post a Comment

Popular Posts

National Strategy for Financial Inclusion (NSFI) 2025-30

Reserve Bank of India (RBI) has published National Strategy for Financial Inclusion (NSFI) 2025-30. Financial Inclusion The Committee on Financial Inclusion (Chairman: Dr C Rangarajan, RBI, 2008) defined financial inclusion as “the process of ensuring access to financial services, timely and adequate credit for vulnerable groups such as weaker sections and low-income groups at an affordable cost”. The Committee on Medium-Term Path to Financial Inclusion (Chairman: Shri Deepak Mohanty, RBI, 2015) viewed financial inclusion as, “convenient access to a basket of basic formal financial products and services that should include savings, remittance, credit, government-supported insurance and pension products to small and marginal farmers and low income households at reasonable cost with adequate protection progressively supplemented by social cash transfers, besides increasing the access of small and marginal enterprises to formal finance with a greater reliance on technology to cut costs an...
Post a Comment
Read more

RBI’s Monetary Policy (December 05, 2025): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on December 05, 2025. Here are some of the highlights of the monetary policy announcement. Rates   Change Rate Policy repo rate Reduced by 25 bps 5.25% Standing deposit facility (SDF) rate 5.00% Marginal standing facility (MSF) rate 5.50% Bank rate 5.50% Monetary policy stance Monetary policy stance unchanged as ‘neutral’. Domestic Economy  Real Gross Domestic Product (GDP) growth accelerated to 8.2% in Q2, buoyed by strong spending during the festive season which was further facilitated by the rationalisation of the goods and services tax (GST) rates.  Real GDP growth for 2025-26 is projected at 7.3%. For the first time since the adoption of flexible inflation targeting (FIT), average headline inflation for a quarter at 1.7% in Q2, breached the lower tolerance threshold (2%) of the inflation target (4%). It dipped further to an all-time low of 0.3% in October 2025. The underlying inflation pressu...
Post a Comment
Read more

Reserve Bank of India Act, 1934 – Part-II – Section 17 to 19

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the second article in the series.  Section 17 – Business which the Bank may transact RBI shall be authorized to carry on and transact the several kinds of business hereinafter specified, namely – 17(1) – Accept deposit without interest from the Central / State Government, local authorities, banks and any other persons. 17(1A) – Accept deposit, repayable with interest, from banks or any other person under the Standing Deposit Facility Scheme, as approved by the Central Board, for the purposes of liquidity management.   Bills of Exchange (B/E) & Promissory Note (PN) Bearing 2 or more good signatures, one of which shall be of B/E & PN arising out of Maturing within 17(2)(a) Purchase, sale and rediscou...
Post a Comment
Read more

Systematically Important Banks (SIBs)

Some banks are identified as systematically important and are subjected to higher capital requirements. When are banks termed as systematically important? What are the additional capital requirements for such banks? And which are the systematically important banks in India? What are Systematically Important Banks (SIBs)? Systematically Important Banks (SIBs) are perceived as banks that are ‘Too Big To Fail (TBTF)’.  Why additional policy measures are required for SIBs? The perception of TBTF creates an expectation of government support for these banks at the time of distress. Due to this perception, these banks enjoy certain advantages in the funding markets. However, the perceived expectation of government support amplifies risk-taking, reduces market discipline, creates competitive distortions, and increases the probability of distress in the future. These considerations require that SIBs should be subjected to additional policy measures to deal with the systemic risks and moral ...
Post a Comment
Read more

Reserve Bank of India Act, 1934 – Part-X – Section 58B to 58G

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the tenth and last article in the series.  Chapter V – Penalties Section 58B – Penalties Section Offense Punishment 58B(1) Whoever in any application / declaration / return / statement / information furnished or in any prospectus / advertisement issued for the invitation of deposits of money from the public, willfully makes a false statement or willfully omits to make a material statement. Imprisonment for up to 3 years with fine. 58B(2) Any person fails to produce any book / account / document / statement / information. Fine of up to Rs.1 lakh in respect of each offence. Further fine of up to Rs.5000 for every day till the offense continues. 58B(3) Any person contravenes the ...
Post a Comment
Read more