What are Treasury
Bills?
T-Bills are
also called Zero Coupons. It’s a debt
paper which was first introduced in 1917(Imperial Bank) RBI came into existence
in 1949. T-Bills don’t pay any interest,
T Bills has a tenure of less then a year. T Bills are sold at a discount to
make it attractive & are sold through auction RBI.
Tenure is 91days 182days & 364 days Over here the government wish to borrow
from Residential India’s for repayment of Interest or other financial
obligation. Take for example ₹100 T-bill shall be auctioned to public at ₹ 96 at the time of the maturity (e.g. 91 days/182days
&364days) you shall get ₹ 100 In short, your yield is ₹4. Short term capital gain shall be applicable
depending on your tax bracket.
Where you can buy T Bill’s and
how
T Bills are
also called short
term debt instruments issued by the Government of India you can get it through
auction. RBI You may bid for T-bills non-competitively or competitively,
but not both, for the same auction RBI/Retail In order to book one has
to have a Demat account, trading account & trading platform. Any Leading
banking or broking firm can be of assistance if you fulfil all the above
condition.
What are the advantages of T Bills?
T Bili’s are backed by
Government of India. It has never defaulted till this date. You can keep it as
collateral against securities. You can sell in the secondary market and make profit..
What is the difference between T Bills and Corporate/ Sovereign Bond?
T-bills are short-term, low-risk, low-return debt securities, while sovereign bonds have longer maturities, offer higher returns, but come with a higher risk of default. Investors should carefully consider their investment objectives and risk tolerance before choosing between T-bills and sovereign bonds.
