Treasury Bill

Full form: T-Bill

Investments

Treasury Bills are short-term government debt instruments with maturities of 91 days, 182 days, or 364 days. Issued at a discount to face value; no coupon payment. The difference between issue price and face value is the return.

In detail

T-bills are the safest short-term investment in India (sovereign guarantee, zero credit risk). Yield typically tracks repo rate closely -- currently 6.7-7.1%.nnAccess for retail investors:n1. RBI Retail Direct platform (retaildirect.rbi.org.in): bid directly at auctions, minimum Rs 10,000n2. Gilt mutual funds: indirectly hold T-bills as part of portfolion3. Short-duration debt funds: may hold T-billsnnT-bills are more tax-efficient than FDs for 30% bracket investors in short-term: gains taxed at slab rate but very efficient for companies and trusts.

Formula

T-bill yield = (Face value - Issue price) / Issue price x 365 / days x 100n91-day T-bill issued at Rs 98.25: yield = (100-98.25)/98.25 x 365/91 = 7.18%

Real-life example

🇮🇳 India example

Anand invests Rs 5L in 91-day T-bill at Rs 98,252 (for Rs 1L face value = 5 T-bills). Gets Rs 5L (face value) after 91 days. Gain: Rs 8,740 (Rs 5L - Rs 4,91,260). Annualised yield: 7.15%. Zero credit risk.

Frequently asked questions

T-bill vs liquid fund vs FD for 3-month parking? ▼

T-bill: sovereign guarantee, slightly higher yield, less liquid (fixed maturity). Liquid fund: AAA-rated, T+1 liquidity, 7-7.5%, taxed at slab. FD: guaranteed rate, fixed maturity, premature penalty. For pure safety: T-bill or liquid fund. For convenience: liquid fund wins.