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.
Treasury Bills are basically instruments for short term (maturities less than one year) borrowing by the Central Government. Treasury Bills were first issued in India in 1917. At present, the active T-Bills are 91 days T-Bills, 182 days T-Bills and 364 days T-Bills. T-Bills are issued on discount to face value, while the holder gets the face value on maturity.
Advantages of T-Bills are-
● Zero Risk weightage associated with them. They are issued by the government and sovereign papers have zero risk assigned to them
● High liquidity because 91 days and 364 days are short term maturity
Individuals, Firms, Trusts, Institutions and banks can purchase T-Bills. The commercial and cooperative banks use T-Bills for fulfilling their SLR requirements.
Treasury Bills are issued only by the central government in India.