Treasury Bill
Treasury Bill is issued by the Reserve Bank of India on behalf of the Central Government. They are issued for fixed tenures and are of short duration. At present, Treasury Bills are available for 91 days, 182 days and 364 days. They are issued at a discount and on maturity, the investor gets the face value of the securities. So, the return is fixed and since the bills are backed by the Government, they are a safe and sure avenue of investment.
How are Treasury Bills issued?
Treasury Bills are issued through an auction process. RBI declares the details (date and amount) of the auction for the whole year at the beginning of every calendar year. They are available for a minimum amount of Rs.25000/- and thereafter in multiples of Rs.25000/-, the auction may be price based or yield based.
Factors influencing yields
- Liquidity
- Alternate investment avenues
Participants in T-Bills
- Primary Dealers
- Corporations
- Foreign Institutional Investors
- State Government
- Provident Funds(some are eligible)
- Insurance Companies
Treasury Bills are easily transferable by endorsement. There is no transaction costs in trading of treasury bills and they are actively traded in huge volumes. OCBs and NRIs are allowed to trade only on non-repatriable basis.
