Question 1

What is a Treasury Bill?

Answer

Treasury Bill is an instrument of short-term debt, issued by the RBI on behalf of central Government to meet short-term requirement of funds.

  • They are issued in the form of a promissory note, having maturity period of less than one year.
  • They are highly liquid and have assured returns and with negligible risk of default.
  • They are available for a minimum amount of ₹ 25,000, and in multiples thereof.
  • They are also known as ‘Zero coupon bonds’ as they do not pay any interest, but since the issue price is less than the redemption value, this difference is the interest receivable on them.

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