Treasury Bills

a short term money market

instrument

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 u TRODUCTuO
Treasury Bills are the instruments of short term
obligations issued on auction basis by RBu on behalf
of the Central govt.
They are promissory notes issued at discount for a
fixed period.
These were first issued in undia in 1917.

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 OBJECTu
E
ëThese are issued to raise funds for meeting
expenditure needs and also provide outlet for parking
temporary surplus funds by investors with virtually
no risk.

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ëinimum amount of face value Rs.25000 and in
multiples there of.
There is no specific amount/limit on the extent to
ë

which these can be issued or purchased. £

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mll entities registered in undia like banks, financial
institutions, Primary Dealers, firms, companies,
corporate bodies, partnership firms, institutions,
mutual funds, Foreign unstitutional unvestors, State
Governments, Provident Funds, trusts, research
organizations, epal Rashtra bank are eligible to
purchase Treasury bills.

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 Other important points

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The treasury bills are repaid at per on the expiry of their

tenure at the office of the Reserve Bank of undia,
umbai.

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mll the treasury Bills are highly liquid instruments

available both in the primary and secondary market.

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For treasury bills the day count is taken as 365 days for a
year.
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 `   
ëThese are highly liquid and safe investment, giving
attractive yield.
RBu sells treasury bills on auction basis (to bidders
quoting above the cut-off price fixed by RBu every
fortnight by calling bids from banks, State Govt. and
other specified bodies.

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 DuSCOU T RmTE u T-
BuS
c  
  is an annualized rate of return based on
the par value of the bills and is calculated on a 360-day
basis.

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#$  
"m2$%
 & is the discount rate for the 26-week Treasury
Bill bought at original issue (at the most recent auction of
U.S. Treasury bills. The 
   

  
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$

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the most often used.
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 ŒOW TO BuD??

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c 

  you agree to accept the discount rate

determined at auction. With this bid, you are guaranteed to
receive the bill you want, and in the full amount you w


c   you specify the discount rate you are

willing to accept.

c   

  , you may use Treasury Direct,

egacy Treasury Direct, or a bank, broker, or dealer. To   
  , you must use a bank, broker, or dealer.
c + 
 

c 1   in the full amount you want if the rate you
specify is less than the discount rate set by the auction,

c 2    in less than the full amount you want if your bid
is equal to the high discount rate,

c 3 -   if the rate you specify is higher than the discount

rate set at the auction
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c December 01, 2008 WmSŒu GTO - unterest rates on

short-term Treasury bills fell in onday's auction to the
lowest levels on record. The Treasury Department
auctioned $28 billion in three-month bills at a discount rate
of 0.050 percent, down from 0.150 percent last week.
mnother $28 billion in six-month bills was auctioned at a
discount rate of 0.430 percent, down from 0.490 percent last
week. Both the three-month rate and the six-month rate
were at all-time lows.
cTŒm  YOU