Treasury Bills: UPSC Daily Important Topic | 1 March 2022

Treasury Bills

✓Treasury bills are short term (up to one year) borrowing instruments of the Government of India or by a central authority of any country which enable investors to park their short term surplus funds while reducing their market risk.

✓They are auctioned by the Reserve Bank of India (RBI) at regular intervals and issued at a discount to face value.

✓The bill market is a sub-market of the money market in India. There are two types of bills viz.

✓Treasury Bills and commercial bills. While Treasury Bills or T-Bills are issued by the Central Government; Commercial Bills are issued by financial institutions.’

✓T-bills have an advantage over the other bills such as zero risk weightage associated with them.

✓They are issued by the government and sovereign papers have zero risks assigned to them, High liquidity because 91 days and 36 days are short term maturity.