Lec 5 Treasury Bills

Topics to be covered
Introduction
Nature and characteristics
Types of treasury bills
System of marketing
Size and participants
Treasury bill rate

Qualities of TB
High liquid
Absence of risk
Ready availability
Assured yield
Low transaction cost
Eligibility for inclusion in SLR
Negligible depreciation
Types of treasury bills

Ad hoc [91 days TB]
Ordinary: issued to the public
182 days TB
364 days TB
14 days TB
Ad hoc [91 days]

1937
Govt should maintain Rs 50 crores on
Fridays and Rs 6000 crores on other
days
Only for Govt bodies
4.6 rate of interest
Ended 1997
WMA: normal or clean, secured, and
special


Marketing system

Auction
Rs 25000 minimum
Available on tap
After 1993 flexible yield system

182 days TB

1986
Money market instrument
Fiscal instrument
Auctions twice a month
Any person can buy
SLR
Rate is determined by market forces
1992 ended

364 days TB
April 1992
Flexible nature
14 day TB
1997 Intermediate TB(ITB) 91 days
TB
State Govts, and foreign central banks
Book entry form
It is not transferable
Repaid/renewable 14 th day
Rate = rate of WMA



REFERENCE
Financial institutions and markets, L M
Bhole, 4 th edition, ch 17 treasury bill
market