Q. 15.0( 1 Vote )

What is a Treasury Bill?

Answer :

When the government raises money from the financial market to meet short-term mismatches in receipts and expenditure, it issues two types of debt instruments – treasury bills and government bonds. Treasury bills are issued by the government to fulfil short term need for money say less than a year. It is issued as promissory notes under discount


Treasury bills have a maximum maturity of 364 days. It is a money market instrument. At present T-bills are issued in three maturities - 91 days, 182 days and 364 days.


The interest received on them is called discount. It is the difference between the issue price and the redemption value.


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