Understanding Treasury Bills in India: A Secure Investment Option for Indian Investors

What are Treasury Bills?

Treasury bonds or Treasury Bills (T-Bills) are a type of debt instrument issued by the government that matures in less than a year. They are short-term securities with a maximum maturity period of one year and are sold at a discount to their face value. The difference between the discounted price and the face value is the interest earned by the investor.

The government issues T-Bills to raise money for various purposes like financing its budget deficit or managing its cash flows. The Reserve Bank of India (RBI) acts as the issuing and regulating authority of T-Bills. 

What are the various types of treasury bills?

There are four types of T-bills issued by the Reserve Bank of India (RBI), each with a different maturity period:

  • 14-day T-Bills: It has a maturity period of 14 days and is auctioned on the Wednesday of each week by the Reserve Bank of India (RBI) regularly to help the government raise funds to meet its short-term obligations. The minimum issue price of these bonds is Rs 1,00,000.
  • 91-day T-bills: As the name suggests, these T-bills have a maturity period of 91 days. Banks most commonly use them to manage their short-term liquidity needs. You can invest in them in multiples of Rs 25,000.
  • 182-day T-bills: These bills have a maturity period of 182 days. They offer a slightly higher yield than 91-day bills. The minimum issue price of these bonds is Rs 25,000
  • 364-day T-bills: These bills have a maturity period of 364 days, are the most liquid of all T-bills, and offer the highest yield. They are mainly used by large institutional investors, such as banks and mutual funds, to park their short-term funds. You can invest in them in multiples of Rs 25,000.

How to calculate the yield on the Treasury Bond?

To calculate the yield before buying Treasury Bills, you can use the following formula:

Yield = (Face Value – Purchase Price) / (Face Value x Time to Maturity) x (365 / Days to Maturity)


  • Face Value is the amount of money the Treasury bill will be worth at maturity.
  • The Purchase Price is the price you paid to buy the Treasury bill.
  • Time to maturity is the number of days between the purchase date and the maturity date of the Treasury bill.
  • Days to maturity is the number of days in the year until the maturity date of the Treasury bill (usually 365 days).

Benefits of Trading Treasuries

  • Low risk: They are among the safest investments available. They are issued by the government and carry no credit risk.
  • Liquidity: Treasury bills are highly liquid and can be easily bought and sold in the secondary market before they mature.
  • Competitive returns: T-bills offer competitive returns compared to other short-term investment options such as savings accounts, fixed deposits, or money market funds.
  • Diversification: Treasury bills can help diversify your investment portfolio, as they are not affected by the fluctuations in the stock market and provide a stable source of income.

Credit is essential for individuals, businesses, and governments to invest in projects and drive economic growth. As governments look for ways to fund their operations, they turn to several financial instruments, and Treasury Bills are among the most popular. 

Purchaing Treasury Bills

Acquiring treasury bills in India involves two primary methods: participating in auctions in the primary market or purchasing them from the secondary market. These bills, issued by the Reserve Bank of India (RBI) on behalf of the government, go through weekly auctions, with details like amount, maturity, and date announced on the RBI website.

Investors can join these auctions via their banks or brokers, offering competitive or non-competitive bids. Competitive bids specify both price and quantity, while non-competitive bids focus solely on quantity. The RBI allocates treasury bills based on bids and the cut-off price.

Alternatively, investors can buy treasury bills in the secondary market, where they are traded among various entities, including banks, financial institutions, and mutual funds. Transactions occur through banks or brokers at market prices. To engage in these transactions, investors must have a Demat account and a PAN card.

Who Should Consider Investing in Treasury Bills in India?

Government Treasury Bills are an excellent choice for individuals seeking a secure investment option with guaranteed returns. The non-competitive bidding process by the RBI ensures transparency and accessibility, making them suitable for both novice and experienced investors. Investing in Treasury Bills also aids in robust wealth accumulation and financial planning.

In conclusion

Treasury Bills in India offer a secure and lucrative investment avenue for Indian investors. With their distinct features, advantages, and tax considerations, T-Bills are an integral part of India’s financial landscape, catering to the diverse needs of investors looking for stable returns with minimal risk.


What is a treasury bill?

A treasury bill is a short-term debt instrument issued by the Government of India to raise funds for its expenses. These bills have maturities ranging from 91 to 364 days and are sold at a discount to their face value, with the difference as the interest income for investors. Treasury bills are considered low-risk and easily tradable investments, backed by the government.

What is a treasury bill example?

An example of a treasury bill is the 91-day treasury bill issued on April 7, 2021. With a face value of ₹100, it was sold at a 3.24% discount, meaning investors paid ₹96.76 per unit. At maturity on July 8, 2021, investors received ₹100 per unit, resulting in an annualized yield of 3.37%.

What is a treasury bill in simple terms?

In simple terms, a treasury bill is a short-term loan from an investor to the government. The investor buys it at a lower price than its face value and gets the face value back at maturity. The difference is the interest earned.

What are treasury bonds and bills?

Treasury bonds and bills are both government-issued debt instruments in India. Treasury bills have shorter maturities (91 to 364 days) and are sold at a discount, while treasury bonds have longer maturities (1 to 40 years) and pay fixed coupon rates. Treasury bills are more liquid and less volatile due to shorter durations and higher demand.


Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.