Treasury Bills: People often prefer market-risk-free schemes for investment. Post Office and government banks have several plans that are popular among common people. In between all the schemes, fixed deposits have become one of the most popular and reliable investment plans. There is another way you can invest away from market risk. Treasury bills are also an option to invest with a good interest rate, an interest rate higher than FD, and with security.
What is treasury bill and how to invest
Treasury bills are issued by the Reserve Bank of India on a weekly basis. Previously, only banks or big financial institutions were allowed to invest in long-term bonds and treasury bills (T-Bills). However, now regular investors can also put their money into them. The Indian government also requires to take loans for infrastructure projects. It is sent to the Reserve Bank of India. The RBI auctions the government’s debt in the form of bonds or treasury bills. You have the option to purchase it as well. By doing this, you are essentially contributing a portion of the loan being procured by the government. There is a set interest rate on this, and the government also repays the original amount on schedule.
A treasury bill, also known as a T-bill, is the debt that the government repays within a year. There are three different types of Treasury bills: 91 days, 182 days, and 364 days. Treasury bills are sold for less than their face value. Upon reaching maturity, the investor receives the price they initially invested. If an investor purchases a 91-day T-bill for 97 on discount with an actual value of 100, he will receive 100 rupees back on maturity after 91 days. By doing this, he will make a profit of 3 rupees. To invest in treasury bills, a minimum of Rs 25,000 is needed.
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