Treasury Bills are short term (up to one year) borrowing instruments of the Government of India which enable investors to park their short term surplus funds while reducing their market risk.
- They are auctioned by Reserve Bank of India at regular intervals and issued at a discount to face value. On maturity the face value is paid to the holder.
- The rate of discount and the corresponding issue prices are determined at each auction. When liquidity is tight in the economy, returns on Treasury Bills sometimes become even higher than returns on bank deposits of similar maturity.
- Any person in India including Individuals, Firms, Companies, Corporate bodies, Trusts and Institutions can purchase Treasury Bills. Treasury Bills are eligible securities for SLR purposes.
- Treasury Bills are available for a minimum amount of Rs. 25,000 and in multiples of Rs. 25,000 thereafter. They are available in both Primary and Secondary Market.
- Treasury Bills are issued in the form of SGL – entries in the books of Reserve Bank of India to hold the securities on behalf of the holder. The SGL holdings can be transferred by issuing a SGL transfer form
- Treasury Bills are also being issued under the Market Stabilization Scheme (MSS)
Type of Treasury Bills:
Currently, T-Bills of three different maturities: 91 days, 182 days and 364 days are being issued on a weekly basis on Wednesdays.
Advantages of investing in Treasury Bills:
- No Tax Deducted at Source (TDS)
- Zero default risk as these are the liabilities of GOI
- Liquid Money Market Instrument
- Active secondary market thereby enabling holder to meet immediate fund requirement.
SBI DFHI Ltd, is an active player in the both the primary and the secondary market for Treasury Bills with an impressive total turnover of Rs. 67,066 crore during the financial year ended 31st March 2019.