TREASURY BILLS

TREASURY BILLS :
- These bills are the main instrument of short-term borrowing by the government and serve as convenient gilt edged security for the money market.
- The Reserve Bank, as an agent of the government, sells treasury bills at a "discount".
- The difference between the amount paid by the tenderer at the time of purchase (less than face value) and the amount received on maturity represent the amount of interest and known as discount.
- These are negotiable securities and can be rediscounted with the Reserve Bank at any time before maturity upon terms and conditions prescribed by the bank.
- Presently treasury bills of 91 days and 364 days of maturity are sold through weekly auctions.