Banking

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rashima (Querist)
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12 September 2012 what is the meaning of treasury bill? how and to whom it issued and procedure of issuing it? please reply

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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12 September 2012 Treasury Bills are the instruments of short term borrowing by the Central/State govt. They are promissory notes issued at discount and for a fixed period. These were first issued in India in 1917.
Objectives
These are issued to raise funds for meeting expenditure needs and also provide outlet for parking temporary surplus funds by investors.
Investors
Treasury bills can be purchased by any one (including individuals) except State govt. These are issued by RBI and sold through fortnightly or monthly auctions at varying discount rate depending upon the bids.
Denomination
Minimum amount of face value Rs.1 lac and in multiples there of. There is no specific amount/limit on the extent to which these can be issued or purchased.
Maturity : 91 days and 364 days.
Rate of interest
Market determined, based on demand for and supply of funds in the money market.
Other features
• These are highly liquid and safe investment giving attractive yield.
• Approved assets for SLR purposes and DFHI is the market maker in these instruments and provide (daily) two way quotes to assure liquidity.
• RBI sells treasury bills on auction basis (to bidders quoting above the cut-off price fixed by RBI) every fortnight by calling bids from banks, State Govt. and other specified bodies.
DATED SECURITIES
These are those instruments which have tenure over one year. The returns on dated securities are based on fixed coupon rates akin to corporate bonds. These are considered risk free.

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rashima

rashima (Querist)
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13 September 2012 thanx a lot sir, please tell me wat is the maximum amount of treasury bill one can purchased?whether people purchased these bills in today's era?

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