What are Treasury Bills?

TREASURY BILLS : Treasury bill is a short term money market instrument used by the
Central Government for short term borrowing from the market for meeting urgent financial
needs. Its features are:
(a) The maturity of a treasury bill is for a period of six months.
(b) It is issued at a discount and is repayable at par.
(c) It carries low rate of return due to short period and hence it fails to attract individual
investors for profitable investment. Institutional investors use this instrument for short
term investment of surplus funds.
(d) It is a gilt-edged security. It has highest safety as government is responsible for the
payment of interest and refund.
(e) The RBI looks after the issue and sale of treasury bills on behalf of the Central
Government. The sale of treasury bills is by auction.