A Treasury Bill (T-Bill) is a short-term government debt instrument issued at a discount and redeemed at face value on maturity, with no periodic interest payments.
Treasury Bills (T-Bills) are low-risk investment instruments issued by the government to meet short-term funding needs. In India, T-Bills are issued by the Reserve Bank of India on behalf of the government.
T-Bills are available in different maturities such as 91 days, 182 days, and 364 days. Unlike regular bonds, they do not pay interest. Instead, they are issued at a discount to face value, and the investor earns profit when the bill is redeemed at full value on maturity.
Because they are backed by the government, T-Bills are considered highly safe and liquid investments. They are commonly used by banks, financial institutions, and investors for short-term parking of funds.
T-Bills are also used as a benchmark for short-term interest rates and play a key role in monetary policy and liquidity management.
"An investor buys a T-Bill with a face value of ₹1,00,000 at ₹95,000. On maturity, the government pays ₹1,00,000, giving the investor a profit of ₹5,000."