Treasury bills also known as Zero Coupon Bond is a promissory note issued by the Reserve Bank of India on behalf of the Central Government to meet the short-term requirement of funds. Treasury Bills were first issued by the Indian Government in 1917.
Treasury bills are short-term securities that mature in one year or less from their issue date. These are highly liquid instruments. These are issued at a price less than their face value and repaid at face value.
The difference between the issue price and the face value of the treasury bill is the interest receivable on them is call discount. These bills are available for a minimum amount of Rs. 25000 and in multiples there of. These are available both in primary and secondary markets.
Banks, Financial institutions and corporations normally play a major role in Treasury bill market.
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