INTRODUCTION OF T-BILL MARKET

A particular kind of finance note put out by the

government of the country. Treasury bills are highly

liquid because there cannot be a better guarantee of

repayment than the one given by the government.

They are claims against the government.

 That means when you buy a Treasury, we are

actually loaning money to the government and the

government in turn is paying you interest on the

borrowed money.

LOVELY PROFESSIONAL UNIVERSITY

Presentation Topic: Treasury Bill

Market

Presented by :

Asma Khanam

Roll No: A20

IMPORTANCE QUALITIES O F T-B I L L S

High liquidity.

Absence of risk of default.

Readily available

Assured yield

Low transaction cost

TYPES OF T-BILLSOrdinary T-bills:-

Ordinary T-bills are issued to the public and

the RBI for enabling the government to meet the

needs of supplementary short term finance.

Adhoc T-bills:-

The practice of issuing adhoc TBs has been

discounted through the singing of two agreement

between the government and the RBI.

T-BILLS RATE

Treasury bills rate is the rate of interest at

which treasury bills are sold by RBI.

The effective return on treasury bills is the

discount at which they are sold and their

redemption value.

PRESENT STATUS

At present the government of India issues four

types of treasury bills trough auctions namely 14 day

,91 day , 182 day and 364 day .

There are no treasury bills issued by state

Government.

T-bills are available for a minimum amount Rs.

25000 and in multiple Rs. 25000. T-bills are issued at

a discount and are redeemed at par.

AUCTION

T-bills are auctioned every alternative week of

Wednesday.

The RBI issues quarterly calendar of T-bills auction

which is available at the banks website.

All T-bills are now sold through an auction process

according to a fixed auction calendar, announced by

RBI.

91 DAY T-BILLS AUCTION

Published on Saturday Nov. 11,2010 at 13:50 1 updated

at Saturday Nov.11 2010 at 14:27

The RBI has announced the auction of 91 days

Government of India Treasury Bills for notified amount of

Rs 2000cr.

The auction will be conducted on Nov 15 2010.

The sale will be subject to the terms and conditions

specified in

CONTD……….

the General Notification No. F.Z.(12)-W and M/97 dated 31st March

1998 issued by Government of India and as amended from time

Tender should be submitted in the prescribed form on Wednesday

November 15,2010 by 12:30 P..M.

Results will be announced on the same evening.

Payments by success full bidders will be on Friday, November 17,2010.

Any person in India including individuals, firms, companies, corporate

bodies.

Trusts and Institutes can purchase T-bills.

FORM

The T-bills are issued in the form of Promising note

in Physical Form or by credit Subsidary General

Ledger (SGL) account or Gill account in

dematerialised form.

MINIUM AMOUNT OF BIDS

Bids for treasury bills are to be made for a

minimum amount of Rs25000/- only and in multiples

there of.

REPAYMENTS

The T-Bills are repaid as par on the expiry of their

tenor at the office of RBI, Mumbai.

YIELD CALCULATION

The yield of a T-Bill is calculated as per the

following formulla:-

Y=(100-P)*365*100/P*D

Y:-Discounted Yield

P:-Price

D:-Days of maturity

SALIENT FEATURESOF THE AUCTION TECHNIQUE

The auction of T-Bills is done only at RBI Mumbai.

Bids are submitted in terms of price per Rs100.

e.g a bid for 91-day . T-Bill auction could be for

Rs97.50. Auction Committee of RBI decides the

cut-off price and results are announced on the

same day.