Classification of T-Bills in India

Classification of T-Bills in India

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Short-term financial instruments are T-Bills, also referred to as Treasury Bills. It is a promissory note promising later payment. The funds obtained are typically put to use to meet immediate requirements. Additionally, it is utilized to lessen the nation's overall budget deficit. T-Bills are available at a discount off the total price for individual purchases. When they are redeemed for a minimum, the investors can then profit from the difference. Since T-Bills are issued at Zero-Coupon rates, there is no accumulation of interest. Consequently, the Reserve Bank of India relies on it as a crucial financial tool. It backs the RBI's efforts to control and regulate the market's overall cash flow. We already comprehend what Treasury Bills are. It's time to learn about their various types, benefits and drawbacks, and how to buy Treasury Bills. Let's take a closer look at each one. There are four different types of Treasury Bills. These Treasury Bills are distinguished primarily by their holding time.

1. Treasury Bill for 14 days - These Bills arrive at development 14 days after the date of issuance. The payment is made the following Friday, following the auction on Wednesday. There is an auction every week. Similar to the previous, these bills require a minimum investment of Rs. They are offered in multiples of that amount, which is one lakh.

2. 1-Year Treasury Bill - On the 91st day following their issuance, these banknotes reach full maturity. They go available to be purchased every week. They are sold at auction on Wednesday, and the winning bids are paid out on Friday. Similar to that, such bills require a minimum deposit of Rs. 25000, and multiples of that amount are available.

3. Depository Bills for 182 days - 182 days after the date of issuance are required for these Bills to develop. When the period ends on Friday, the funds are paid out after the Wednesday auction. Every two weeks, they are auctioned off. Similar to other bills, these require a minimum investment of Rs. 25000, and they are presented in products of that sum.

4. Treasury Bills for 364 days - These notes mature 364 days after they are issued. After the auction on Wednesday, the money is paid on the following Friday, when the term ends. Every two weeks, they are auctioned off. Similar to other bills, these require a minimum investment of Rs. 25000, which were sold in multiples of that.

As was previously stated, each banknote has a continuous holding period. However, cyclical adjustments are made to the face value and discount rates of Treasury Bills. This is contingent on the monetary policy of the RBI, the requirements for funding, and the total contributions received. A schedule for Treasury Bill auctions is also published by the Reserve Bank of India. The precise date, the amount to be auctioned, and the maturity dates are announced prior to each auction.