Types of Treasury Bills

The Government of India needs funds to meet its long and short-term financial obligations. To meet such requirements, they approach the general public. They offer various financial instruments. Treasury Bill is one of the financial instruments that help the government to meet short-term fund requirements. There are various types of treasury bills in India.

What is a Treasury Bill?

A Treasury Bill or T-bill is a short-term money market instrument with a maturity period of up to one year. RBI issues T-bills on behalf of the state or central government when they face liquidity shortfalls. It curbs the short-term liquidity crunch and reduces the overall fiscal deficit.

The general public does not issue treasury bills.  Institutional investors like banks create a market to sell T-bills.

RBI sells Treasury Bills through auctions. They are available for a minimum price of ₹ 25,000, and bidding happens in the multiple of ₹ 25,000 (say 50,000, 75,000, 1,00,000, and so on).

Treasury Bills are issued at a discount and redeemed at face value. The investors earn the difference in amount. For example – A person purchases a 181-day-Treasury Bill whose face value is ₹ 25,000. The issue is at 20,000, and on maturity, the holder will receive ₹ 25,000. The profit for the holder will be ₹ 5,000. Treasury Bills do not carry any interest.

These are government-backed securities. Hence they are highly secured.

What is a Treasury Bill

Types of Treasury Bills

The Treasury Bills are of four types depending upon the maturity:

  1. 14-day Treasury Bills – These bills have maturity after 14 days from the issue date. Auctions take place every week to sell the T-bills. The sale takes place on Friday, and the payment happens on the following Saturday. The amount is paid on the day after the holiday if the maturity date falls on a holiday. The minimum investment is 1 lakh, and bidding takes place in the multiple of 1 lakh.
  2. 91-day Treasury Bills – These bills complete their maturity after 91 days from the issue date. The auction takes place every week. A sale takes place on Friday, and payment is due the following Saturday. The auction happens in multiples of ₹ 25,000, and the minimum investment amount is ₹ 25,000.
  3. 182-day Treasury Bills – These bills complete their maturity after 182 days from the issue. The sale takes place on Wednesday, and the payment follows the following Thursday. The bills are sold in multiples of ₹ 25,000, and the minimum investment is ₹ 25,000. Auctions take place every alternate week.
  4. 364-day Treasury Bills – These bills have a maturity after 364 days from the issue date. They are sold through auctions which takes place every alternate week. Typically, the sale is on Wednesday and paid on the following Thursdays. The bills are sold in multiples of ₹ 25,000, and the minimum investment amount is ₹ 25,000.

The maturity remains constant, but the face value and the discount rates change depending upon the fund requirements of the government. RBI announces the exact date of the auction, maturity dates, and the price of T-bills before the auction.

How to buy Treasury Bills?

RBI issues treasury bills in primary markets through competitive and non-competitive auctions.

In competitive bidding, institutional investors like financial institutions, banks, insurance companies, mutual funds, primary dealers are the major participants.

In non-competitive bidding, the participants are trusts, firms, corporate bodies, individuals, provident funds and other parties. They participate in the auctions without quoting the price. Allocation takes place partially or fully according to the plan.

RBI issue auction calendar, which has all the information regarding- tenor range, borrowing, and auction duration.

The bids happen on an electric platform called E-Kuber in CBS (Core Banking Solution) of RBI. Competitive bidders who maintain funds or current or securities account are members of the E-Kuber platform. All the members submit the bids through this electronic platform, and later RBI publishes the results within the stipulated time.

Non-Competitive bidders invest through trading members of the NSE or NSE goBID app. Non-competitive must have a Demat account. Follow the steps below to place bids:

  1. Log in to your Demat account
  2. Under the IPO section, select the T-bill you wish to invest in
  3. Click on apply
  4. Place your bids
  5. The trading platform notifies you of your successful application
  6. The allotted T-bills will reflect into your account in T+1 day

How to buy T-bills

RBI Retail Direct Scheme

PM Narendra Modi has launched the RBI Retail Direct Scheme. The scheme will promote financial inclusion by allowing retail investors to participate in the government securities and contribute towards nation-building.

The RBI Retail Direct Scheme will enable retail investors to invest in government securities and earn guaranteed returns. It will also help the Indian government to collect funds for nation-building.

The RBI Direct Retail Scheme aims at enhancing the accessibility of government securities to small investors. It provides a new avenue for retail investors for direct investments in securities issued by the State and Central government.

The investors will get a platform to maintain their accounts with the RBI through online modes, free of cost. With the help of technology, RBI created a portal avenue for investors to put their money in treasury bills, government securities, state development loans, and sovereign gold bonds.

Retail Direct Scheme

Key Highlights of Treasury Bills

Treasury Bills, government-backed securities, have zero default risk. They are a liability to the Indian government and are payable on maturity.

T-bills are highly liquid instruments available in both primary and secondary markets. They help to raise short term fund requirements for the economy. As they are available in the secondary market, investors can easily convert their holdings into cash.

RBI auctions T-bills every week, which allows retail investors to place their non-competitive bids. It increases their exposure to government bond markets, creating higher cash flows to the capital market.


Treasury Bills are issued at a discount and redeemed at par. They are zero-coupon bonds because no interest is payable.

T-bills yield lower returns as compared to the stock markets. The returns earned are constant irrespective of the economic conditions prevailing in the country. If the stock markets move upwards, then equity, debt funds, equity funds also get higher, but Treasury Bills remain fixed irrespective of the fluctuations in the financial markets. The value of T-bills tends to fall due to inflation.

For example – If a person purchases a Treasury Bill at a 2% yield when the inflation is 3%,