Stock Market · Currency, Commodity & GSec

T-bills

Treasury Bills (T-bills) are short-term government securities with maturities of 91 days, 182 days, or 364 days. They are the safest, most liquid short-term instruments in India.

How T-bills work

T-bills are issued at a DISCOUNT to face value and redeemed at face value at maturity.

Example: 91-day T-bill with face value ₹100.

Issued at ₹98.20 (discount).

Redeemed at ₹100 at maturity.

Return = ₹1.80 on ₹98.20 investment over 91 days ≈ 7.3% annualised.

Why T-bills matter

• The 91-day T-bill yield is the 'risk-free rate' for short-term instruments in India.
• It reflects the current overnight lending rate policy of RBI.
• Liquid funds and money market funds primarily invest in T-bills and short-term commercial paper.

> When the 91-day T-bill yield is 7%, any investment with similar maturity offering less than 7% is a bad deal. You're accepting extra risk for less return.

Access for retail investors

Via RBI Retail Direct: participate in weekly T-bill auctions.

Via liquid mutual funds: indirect exposure to T-bills in pooled form.

T-bill vs savings account

Savings account at major banks: 2.5-3.5%.

91-day T-bill: 6.5-7.5% (depending on RBI rate cycle).

Same safety profile (sovereign-backed). Meaningfully higher return.

The catch: T-bills require minimum investment, have a fixed maturity, and are less liquid than savings accounts.

Takeaway. T-bills are 91/182/364-day government paper issued at discount, redeemed at face value. The 91-day T-bill yield is India's short-term risk-free rate. Yields are typically 6-8%. Meaningfully better than savings accounts with the same sovereign safety.