Treasury Bills: Types, characteristics, and other important details

Authored by
Team Espresso
November 14 2022
5 min read

What are the types and characteristics of Treasury Bills?

The government requires money to fulfil its financial commitments like you or me. The funds needed can be raised through a variety of financial products. One such money instrument is the Treasury Bill or the T-Bill. The government uses this product to raise resources to meet its short-term funding needs. These investment products include bonds, debt securities, monetary instruments, and many others. This article will dwell on the meaning and definition of treasury bills.

What is a Treasury Bill?

Treasury Bills or T-bills are financial products issued by the Reserve Bank of India (RBI). It is a debt obligation that includes a promise to pay at a later date. The government normally uses the funds obtained to meet urgent financial needs. It is also used to lessen the overall fiscal imbalance of the country.

T-bills come at zero-coupon rates, meaning that no interest is paid on them. T-bills are offered at a discount to their face value. They are redeemed at a nominal amount, allowing the owner of the T-bill to profit from the gap. As an illustration, suppose a person buys a 91-day T-bill of Rs 100 face value at Rs 95. The T-bill holder receives Rs 100 at maturity, earning the individual a profit of Rs 5.

Thus, T-bill is crucial security that the RBI employs. It assists the RBI in both raising money and controlling the total amount of money in the economy.

What are the types of treasury bills?

Four different categories of Treasury bills are auctioned. The holding time of these treasury bills serves as the main point of differentiation.

14-day Treasury bill

These notes achieve their full maturity once 14 days have passed from the date they were issued. They are placed for sale on Wednesday, and the proceeds are handed in on the subsequent Friday. The auction takes place every week. The minimum investment amount is Rs 1 lakh, and these bills are sold in multiples of Rs 1 lakh.

91-day Treasury bill

On the 91st day after the issuance date, these banknotes reach their full maturity. They are placed for sale on Wednesday, and the proceeds are paid on the subsequent Friday. They go up for auction each week. The minimum investment in these bills is Rs 25000, which are issued in multiples of that amount.

182-day Treasury bill

These notes mature in 182 days from the date of issuance. The bidding is held on Wednesday of the non-reporting week. These are repaid on Friday after the term expires. They are put up for auction fortnightly. The minimum investment in these bills is Rs 25,000, and they are offered in multiples of that amount.

364-day Treasury bill

These notes reach their maturity 364 days after their issuance. These are auctioned fortnightly. The auction for these is also held on Wednesday, and the money is paid on Friday after the term expires. The minimum investment in these bills is Rs 25,000, which are sold in multiples of that amount.

Each of these notes has a constant holding duration, as already mentioned. Treasury bills' face value and coupon payments are subject to cyclical adjustments. This depends on the RBI's monetary policy, financial needs, and the overall amount of contributions received.

The RBI also releases a schedule for holding Treasury Bill auctions. Before each auction, the precise date, the sum to be auctioned, and the maturity dates are announced.

How can you purchase Treasury Bills in India?

Through RBI auctions, T-bills are released in the primary market. Participation in a commercial or non-competitive purchasing auction is permitted for eligible investors.

Competitive Bidding: Institutional investors who are eligible to submit competitive bids include banking firms, banks, mutual funds, market makers, and insurance providers.

Non-Competitive Bidding: Any party may submit a non-competitive bid, including individuals, HUFs or trusts, businesses, corporations, institutions, provident funds, and others. Non-competitive bidders can participate in the bids without providing a price or yield estimate; therefore, there is no need to question whether or not the bid is genuine. The bidder will receive either a full or partial allocation in conformance with the plan.

The RBI publishes an indicative sale calendar detailing the borrowing, tenor range, and auction duration. On the electronic medium of the auction house, bids may be made throughout the sale period.

Characteristics of treasury bills 


Treasury bills may be produced in disintegrated form by charging an SGL account (Subsidiary General Ledger Account) or in physical form as a promissory note.

Minimum bid quantity

Treasury bills are sold for a minimum of Rs 25,000 and in multiples of that amount.

Issue Cost

Treasury bills are sold at reduced rates. But when they fully mature, they are redeemed at their face value.


Treasury bills may be purchased by individuals, businesses, trusts, banks, insurance providers, provident funds, state governments, and financial organisations.

Highly liquid

Negotiable instruments include highly liquid T-bills. They are accessible in both major and secondary financial markets.

Who should consider investing in treasury bills?

Anyone with a one-year investment horizon for achieving short-term objectives and no desire to take on any risks in their assets should consider investing in T-bills.

When someone claims that investing in T-bills would yield superior returns because credit-risk bonds have been issued by the government of India and do not entail maturity risk, it is vital to note that this is not the case for credit-risk bonds.

Final thoughts

Due to the low risk of default, T-Bills are the healthiest investment in fixed-income products in their category. The date of publication, the dates of expiration, and the amounts are all fixed. Also, the yield. They are essential in controlling the total amount of money in the system.


Q. Who can purchase Treasury Bills?

T-Bills can be bought by individuals, businesses, trusts, institutions, and banks. Short-term debt securities also referred to as Treasury bills or T-bills, are presently offered by the Government of India in three terms: 91 days, 182 days, and 364 days. The 14 days Treasure Bills are sold only to state governments, foreign central banks and other specified bodies.

Q. Do Treasury Bills merit purchases?

Treasury bills are a well-liked and accessible investment option. They are easy to use and practically risk-free. But one need not be wealthy to afford them. T-bills have an established face value that represents their true value.

Q. Can Treasury Bills be issued by state governments?

State governments do not issue Treasury Bills. Market forces decide how much interest is charged on Treasury Bills.

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