Treasury Bills Market

Treasury bills are short term(upto one year) borrowing instruments of Government of India which enable investors to park their short term surplus while reducing their market risk.Any person in India including individuals, corporate bodies ,companies , firms, trusts etc can purchase the bill .Till 1950, State govt also used to issue the TB but after that only RBI issue the same on be half of Central Govt. TBs are highly liquid after the Call loan. It doesn’t require any “grading” or endorsement or Acceptance as it it claims against governments. TBs are issued for meeting temporary govt deficit.

Following are some important qualities of TBs.

1.Highly liquidity 2.absence of risks 3.ready availability on tap 4.assured yield 5.low transaction cost 6.eligibility for inclusion in statutory liquidity ratio (SLR). and 7.negligible capital depreciation.

TBs are available with a minimum amount of Rs 25000 and in multiple of Rs 25000 there after.They are available both in primary and secondary market.

There are three type of maturity period for TBs.

91 days, 182 days and 364 days .The 91 day T-bills are issued on weekly auction basis while 182 days T -bills auction are held at Wednesday preceding non reporting Friday and 364 day T -bill auction are held on Wednesday preceding the  reporting Friday.

TYPES OF TB:

In India there are two type of TBs .Ordinary and Ad hoc .

Ordinary Bill: These are issued to the public and the RBI for enabling the government to meet the needs of supplementary short term finance.

Ad hoc TBs: The instrument of Ad hoc treasury and the system of issuing it were introduced in india in 1937. ad hocs are always issued in favour of RBI only . They are purchased  by RBI on the top and RBI is authorized to issue currency note against them.They are marketable ,sell them to RBI back.ad hoc serve govt in following ways:

• They replenish the cash balance of Central Govt.The central govt raise finance through ad hocs.
• They also provide an investment  medium for investing temporary surplus of state govt ,semi govt departments and foreign central banks.

PARTICIPANTS:

RBI , SBI , commercial banks , state government , DFHI, STCI , financial institution like GIC, LIC, UTI , corporate customer and public .

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