CMBs & T-Bills

CMBs & T-Bills

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Cash management bills (CMBs) and Treasury bills (T-bills) are both short-term debt securities issued by governments to manage their cash balances. However, there are some key differences between the two. Cash management bills are short-term debt securities issued by the Reserve Bank of India (RBI) to help the government manage its cash balance. They are sold at a discount from their face value and are typically issued for duration of 91 days or less.

Cash management bills can only be purchased by scheduled banks, primary dealers, and select financial institutions. The minimum amount for investment in CMBs is typically higher than that of T-bills. Treasury bills are also short-term debt securities issued by the government to finance its operations. Unlike CMBs, T-bills are sold to individual investors through the RBI's auction system, and there is typically no minimum amount for investment. The main difference between cash management bills and Treasury bill is who they are sold to. CMBs are sold directly to institutional investors, while T-bills are sold to individual investors. This means that the minimum investment for CMBs is typically higher than that of T-bills. Additionally, CMBs have a shorter duration than T-bills, which provides the government with more flexibility in managing its cash balance.

The RBI issues cash management bills as a way to manage the government's cash balance. Cash management bills RBI are typically issued when the government needs to raise cash quickly, such as during a budget shortfall or when there is a need to finance a specific project. Because cash management bills have a shorter duration than T-bills, they provide the government with more flexibility in managing its cash balance.

Cash management bills minimum amount of investment is typically higher than that of T-bills. This is because CMBs are sold directly to institutional investors, such as banks and money market funds, through the RBI's auction system. These investors are typically able to invest larger amounts of money than individual investors. Hence, both cash management bills and Treasury bills are short-term debt securities issued by the government to manage cash balances. However, there are some key differences between the two, including who they are sold to, their minimum investment amounts, and their durations. However, both these instruments help the government to raise cash and meet short-term obligations.