Definition
Treasury Bills
Treasury Bills are short-term government securities issued at a discount and redeemed at face value, used to manage the government's temporary cash needs.
T-bills are issued by the RBI on behalf of the central government in standard tenors of up to a year and carry no coupon — investors earn the difference between the discounted purchase price and the par value at maturity. They are the safest, most liquid rupee money-market instrument.
The government uses T-bills to bridge mismatches between receipts and spending within the year, complementing longer-term market borrowing through dated securities. Their cut-off yields are closely watched as a gauge of short-term interest rate expectations.
Related terms
- Ways and Means AdvancesWays and Means Advances are short-term, temporary loans the RBI extends to the central and state governments to tide over mismatches in their cash flows.
- Market Borrowing (Dated Securities)Market borrowing is the money the government raises by issuing dated securities — long-term bonds — to investors to finance its fiscal deficit.
- Government Securities (G-Sec)Government securities are tradable debt instruments issued by the central or state governments, considered virtually free of credit risk in rupee terms.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.