treasuty bills market

7/31/2019 Treasuty Bills Market

1/9

treasury bills represent short-term borrowings ofthe Government.

Treasury bill market refers to the market wheretreasury bills are bought and sold.

Treasury bills are very popular and enjoy higherdegree of liquidity since they are issued by thegovernment.

Maturity ranging from 14 to 364 days.
http://slidesandnotes.blogspot.in/2011/02/treasury-bill-markets.htmlhttp://slidesandnotes.blogspot.in/2011/02/treasury-bill-markets.html


2/9

A treasury bills nothing but promissory note

issued by the Government under discount for

a specified period stated therein.

The Government promises to pay the

specified amount mentioned therein to the

bearer of the instrument on the due date.

The period does not exceed a period of one

year.

It does not require any endorsement oracceptance since it is claims against the

Government


3/9

Treasury bills are issued only by the

RBI on behalf of the Government.

Treasury bills are issued for meetingtemporary Government deficits.

The Treasury bill rate of discount is

fixed by the RBI from time-to-time.

It is the lowest one in the entire

structure of interest rates in the

country because of short-term

maturity and degree of liquidity andsecurity.


4/9

On the basis of periodicity, treasury billsmay be classified into three they are:

91 Days treasury bills,182 Days treasury bills, and364 Days treasury bills.

T bills do not carry any fixed rate. Thediscount rate on these bills are quoted inauction by the participants and accepted

by the authorities. Such a rate is called cutoff rate.


5/9

Amount

Treasury bills are available for aminimum amount of Rs.25,000 and inmultiples of Rs. 25,000. Treasury billsare issued at a discount and are

redeemed at par.


6/9

Auctions

While 91-day T-bills are auctioned every weekon Wednesdays, 182-day and 364-day T-bills are

auctioned every alternate week on Wednesdays.The Reserve Bank of India issues a quarterlycalendar of T-bill auctions which is available atthe Banks website. (URL:http://www.rbi.org.in).
http://www.rbi.org.in/http://www.rbi.org.in/http://www.rbi.org.in/


7/9

Where to purchase from?T-bills auctions are held on the

Negotiated Dealing System (NDS)andthe members electronically submit theirbids on the system. Non-competitive bidsare routed through the respective

custodians or any bank or PD which is anNDS member.


8/9

Eligibility:All entities registered in India like banks,

financial institutions, Primary Dealers,

firms, companies, corporate bodies,partnership firms, institutions, mutualfunds, Foreign Institutional Investors, StateGovernments, Provident Funds, trusts,research organisations, Nepal Rashtrabank and even individuals are eligible tobid and purchase Treasury bills.


9/9

Advantages of T-Bills-- No default risk since they are issued by

the government-- Extremely liquid since institutions can

park their short term excess funds.-- Transparent since they are issued by the

country's central bank.-- They can be traded in the secondary

market.

treasuty bills market

Documents