Treasury Bills in India: Auctions, Yields and Treasury Use (2026)

For any bank treasury desk, the short end of the government securities curve begins with Treasury Bills in India — the zero-coupon, sovereign-backed instruments that the Reserve Bank of India issues on behalf of the Government of India to manage the Centre's short-term cash needs. Because they carry no credit risk, settle quickly and qualify for statutory reserves, T-Bills are the workhorse of every dealing room's liquidity book. In this guide we break down the tenors, the auction mechanism, the discount-yield maths and the exact role Treasury Bills in India play in a bank's asset-liability and Statutory Liquidity Ratio (SLR) management, with exam-focused tables and practice MCQs to lock the concepts in.

📜 What Are Treasury Bills in India?

Treasury Bills (T-Bills) are short-term money-market instruments issued by the Government of India through the Reserve Bank of India (RBI) to bridge temporary mismatches between government receipts and expenditure. They are zero-coupon securities: they pay no periodic interest. Instead, they are issued at a discount to their face value and redeemed at par, so the investor's return is the difference between the purchase price and the maturity value. A 91-day bill with a face value of ₹100 might be bought at ₹98.30, and the ₹1.70 gain represents the yield.

Three regular maturities are on offer — 91-day, 182-day and 364-day bills — and the minimum investment is ₹25,000, in multiples of ₹25,000 thereafter. Being direct obligations of the sovereign, T-Bills carry no credit or default risk, which is exactly why they anchor the risk-free short end of the yield curve and feed into pricing across the wider financial market. They are held in electronic form in SGL/CSGL accounts and traded on the RBI's NDS-OM platform, settling on a T+1 basis through the Clearing Corporation of India Ltd (CCIL). For treasury students, T-Bills sit alongside dated government securities and other fixed income securities, but their near-zero duration makes them a cash-equivalent rather than a rate-sensitive investment.

💡 Exam Tip: Remember that T-Bills are always issued at a discount and never carry a coupon. If a question mentions a "coupon-bearing 91-day government security," it is wrong — that is a dated security, not a Treasury Bill.

🗓️ Tenors and the T-Bill Auction Calendar

The RBI conducts T-Bill auctions on a fixed, pre-announced calendar so that market participants can plan bids in advance. All three tenors — 91-day, 182-day and 364-day — are auctioned every week, typically on Wednesdays, with settlement the following working day. The notified amount for each tenor is published in the quarterly auction calendar, giving the market clear visibility of supply. Auctions use the multiple-price (French) method, where each successful bidder pays the price it actually bid, unlike dated securities that often use a uniform-price cut-off.

Bidders fall into two categories. Competitive bids come from banks, primary dealers, mutual funds and insurers who quote a specific price (yield); they are allotted from the highest price downwards until the notified amount is filled. Non-competitive bids — from retail investors, State Governments, provident funds and others — are accepted outside the notified amount at the weighted-average price, so small players get access without needing to guess the cut-off. Alongside regular bills, the RBI issues Cash Management Bills (CMBs), introduced in 2010, for maturities shorter than 91 days to meet purely temporary cash-flow gaps. CMBs share all the features of T-Bills, are tradable and SLR-eligible, but have flexible, need-based tenors. Understanding this calendar is part of the daily rhythm of a dealing desk, which you can revise in our note on Treasury Organisation Structure covering the front, mid and back office split.

📌 Remember: T-Bills use multiple-price auctions; each winner pays its own bid price. Non-competitive bidders are allotted at the weighted-average price and fall outside the notified amount.

💰 How T-Bill Yields Are Calculated

Because T-Bills are discount instruments, the exam almost always tests the conversion between price and yield. The simple (money-market) yield is calculated on the discounted purchase price, not on the face value, and is annualised using a 365-day year in India. The standard formula is:

Yield (%) = [(Face Value − Purchase Price) / Purchase Price] × (365 / Days to Maturity) × 100

Take a 91-day bill with a face value of ₹100 purchased at ₹98.30. The discount is ₹1.70, so the yield is (1.70 / 98.30) × (365 / 91) × 100 ≈ 6.94%. Notice the annualisation factor (365/91) scales the 91-day return up to a per-annum figure, and dividing by the purchase price — not the face value — is what distinguishes true yield from the simple discount rate. A common variant asks you to work backwards: given a required yield, compute the price a dealer should bid. This price sensitivity, though small for such short tenors, links directly to the concepts of duration you study for longer fixed income securities. T-Bill yields also serve as a benchmark for pricing other short-term paper and feed the risk-free leg used in funds transfer pricing in banks, so mastering the maths pays off across the syllabus.

⚠️ Common Mistake: Do not divide the discount by the face value (₹100) to get the yield — divide by the actual purchase price. Using face value understates the true return and is the classic trap in T-Bill numericals.

🏦 Why Treasury Desks Hold Treasury Bills in India

For a bank's treasury, T-Bills are far more than a parking lot for idle cash. First, they are SLR-eligible government securities, so holding them helps the bank meet its Statutory Liquidity Ratio without locking money into long-duration bonds that carry mark-to-market risk. Second, their near-zero duration makes them the ideal buffer for managing liquidity and the asset-liability gap — a treasury can raise or run down T-Bill holdings quickly to match funding needs, complementing overnight sources such as the call money market in India.

Third, T-Bills are the standard collateral for repo and market repo transactions, including the RBI's liquidity operations, so a well-stocked T-Bill book gives the desk flexibility to borrow cheaply against high-quality collateral. Fourth, they earn a return with virtually no credit risk, improving the yield on the liquidity portfolio versus keeping cash in current accounts. Every T-Bill position must, of course, respect the desk's internal counterparty and instrument limits — the discipline captured under exposure norms. Treasuries active in foreign markets must also watch cross-border reporting deadlines; a missed FEMA filing can trigger a late submission fee, a reminder that even a low-risk instrument sits inside a wider compliance framework. For deeper revision across the syllabus, browse the full Treasury Management topic hub.

📊 Treasury Bills vs Other Short-Term Instruments

The table below contrasts Treasury Bills with Cash Management Bills, Commercial Paper and Certificates of Deposit on the features examiners love to test — issuer, credit risk, coupon and SLR eligibility.

The key takeaways: only the two sovereign bills are SLR-eligible and free of credit risk, while corporate and bank paper carry issuer risk and cannot be counted towards SLR. All four are discount instruments, which is why yield-versus-price maths applies uniformly across the money market. If you can reproduce this grid in the exam, most one-mark T-Bill questions become trivial.

🧠 Practice MCQs: Treasury Bills in India

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❓ Frequently Asked Questions

Authoritative reference: see the latest guidelines on the Reserve Bank of India website and the IIBF syllabus portal.

Treasury Bills are one of the highest-yielding topics per hour of study for the Treasury Management exam — a handful of formulas and features unlock several guaranteed marks. Cement them with full-length practice on our CAIIB and certification courses and time-bound mock tests before your exam day.