Treasury Bills (T-Bills)
T-Bills are short-term debt instruments issued by the Government of India to manage short-term liquidity. They are zero-coupon securities, meaning they don’t pay interest — instead, they’re issued at a discount and redeemed at face value.
Announcement
RBI announces new T-Bills with tenures of 91, 182, or 364 days, along with the auction date and issue size.
Let’s Learn How T-Bills Work with an Example
Step 1. A T-Bill is Announced:
The RBI announces a 91-day T-Bill with a cut-off price and face value of ₹100.
Step 2. You Place an Order:
You apply for 100 units at ₹100 each.
Amount Blocked: ₹10,000
- This is the maximum you’ll pay; the actual price could be lower.
Step 3. Auction & Allotment:
What Happens After You Bid?
- Once bidding ends, a final price is decided (e.g., 96.25).
- You’re allotted 100 units at this final price.
- Since you had paid ₹10,000 in advance and only ₹9825 is needed, ₹175 is refunded to your bank account.
- The allotted units are credited to your demat account automatically.
Step 4. What Happens at Maturity:
- On maturity (after 91, 182, or 364 days), the full face value (₹100 per unit), i.e ₹100 is credited to your bank account.
- Net Investment: ₹9825
- Principal Returned: ₹10,000
- Net Earnings: ₹175
You don’t need to hold T-bills until maturity.
- Sell anytime on the exchange via your demat account
- Sale value will depend on market demand and prevailing interest rates
- You may receive more (premium) or less (discount) than what you paid
Tip: While early exit is allowed, T-bills prices can fluctuate, and liquidity may vary—so plan your holding period accordingly
While browsing T-bills offers, you’ll come across certain terms—like coupon rate, face value, or cut-off price. Don’t worry if they sound technical. Here’s a quick breakdown of the key terms to help you understand what you’re investing in, without the jargon.
Issued By | T-bills are issued by the Reserve Bank of India on behalf of the Government of India. |
Tenure | 91, 182, or 364 days |
Maturity Date | The date your investment (at face value of ₹100 per unit) is fully repaid, along with the final interest. |
Face Value | The original value of the bond, usually fixed at ₹100 per unit. Principal repayment at maturity is based on face value. |
Cut-off | The highest price per unit at which T-bill can be allotted. If allotment happens at a discounted price, the unused amount is refunded to you. |
Minimum Investment | The smallest investable amount, based on min. units × cut-off price (e.g. 100 × ₹100 = ₹10,000). |
Return payout | T-bills are allotted at a discounted price and redeemed at face value on maturity. So, if the discounted price is ₹95 and face value is ₹100, your return per unit is ₹5 |
Indicative yield (or Return p.a.) | Estimated annual return based on past T-bill auctions. Actual yield may vary depending on the allotment price. |
Frequently Asked Questions
You need to invest in at least 100 units. The final amount depends on the cut-off price (e.g., ₹100 × 100 = ₹10,000).
No, currently T-bills held in your demat account cannot be pledged to avail trading margins. Click here for more details.
Yes, T-bills are tradable on exchanges. You can exit anytime, but the sale price depends on market demand and prevailing interest rates.
You can view and invest in live T-bill auctions directly through the Kotak Neo app under the “Invest/ Government Bonds” section. Click here to view T-bill listings