Treasury bills are short-term promissory notes issued by the government of India to finance its short-term borrowing needs. There are two types of treasury bills - ordinary bills which are freely tradable, and ad-hoc bills which are non-tradable and issued only to the RBI. Treasury bills are issued in 91-day, 182-day and 364-day maturities through weekly and fortnightly auctions. While treasury bills offer safety and liquidity, their yields tend to be low making them less attractive compared to other government securities.

1. Treasury Bills
PREPARED BY:-
Vandana yadav
Joysee Toppo
Manish Bansal
Anshika Jaiswal
Vidhi Agrawal

2. What is Treasury Bill?
DEFINITION
• A treasury bill is nothing but a promissory
note issued by the Government under dis
count for a specified period stated therein.
• Treasury Bills are money market instrume
nts to finance the short term requirements
of the Government of India.

3. What is Treasury Bill?
• These are discounted securities and thus
are issued at a discount to face value
• The return to the investor is the difference
between the maturity value and issue
price.

4. Treasury Bill Market
• Treasury bill market refers to the market
where treasury bills are brought and sold.

5. Types of Treasury bills
• Ordinary or Regular
• AD-HOCS

6. Ordinary Treasury Bill
• Ordinary treasury bills are issued to the
public and other financial institutions for
meeting the short-term financial
requirements of the Central Government.
• These bills are freely marketable and they
can be brought and sold at any time and
they have secondary market also.

7. AD-HOCS
• ‘Ad hocs’ are always issued in favor of the
RBI only.
• They are not sold through tender or
auction. They are purchased by the RBI
and the RBI is authorized to issue
currency notes against them.

8. AD-HOCS
Ad hocs serve the Government in the
following ways:
• They replenish cash balances of the
central Government. Just like State
Government get advance from the RBI,
the Central Government can raise finance
through these ad hocs.
• They also provide an investment medium
for investing the temporary surpluses of
State Government, semi-government
departments and foreign central banks.

9. On basis of periodicity
Type Of T Bill periodicity Day Of Auction
91-days Weekly Every Wednesday
182-days Fortnightly Alternate Wednesday
354-days Fortnightly Alternate Wednesday(with
no -182-days T bill auction)

10. Continue..
• 91 days treasury bills are issued at a fixed
discount rate of 4% as well as through
auctions.
• 364 days bills do not carry any fixed rate.
The discount rate on these bills are
quoted in auction by the participants and
accepted by the authorities. Such a rate is
called cut off rate.

11. PARTICIPANTS
• RBI and SBI
• Commercial banks
• State Governments
• Financial institutions like LIC,IDBI, ICICI,
• IFCI, NABARD, etc.
• Corporate customers
• Public

12. IMPORTANCE OF TB
• Safety
• Liquidity
• Ideal Short-Term Investment
• Ideal Fund Management
• Non-Inflationary Monetary Tool

13. Disadvantage of TB
• Poor Yield: The yield form TBs is the
lowest.
Long term Government securities fetch
more interest and hence subscriptions for
TBs are on the decline in recent times.
• Absence Of Competitive Bids: Though
TBs are sold through auction in order to
ensure market rates for the investors, in
actual practice, competitive bids are
conspicuously absent.

14. Continue...
The RBI is compelled to accept these non-
competitive bids. Hence adequate return is
not available. It makes TBs unpopular.
• Absence Of Active Trading: Generally,
the investors hold TBs till maturity and
they do not come for circulation. Hence,
active trading in TBs is adversely affected.

15. Thank you