Treasury Bills, are a variety of money market instruments available in both US and India. These are the zero coupon bond and doesn’t pay any coupon. That’s why these are generally issued at discount and on maturity redeemed at the face value. In India, also called as Government Instruments (G-secs), it is issued by RBI and are backed by Government of India. These are short term debt instruments as the tenure of currently issued T bills is of 3 varietys: 91 day (3 months), 182 day (6 months) and 364 day (1year). For example, a 91 day Treasury Bill of Rs.100/- (face value) may be issued at a discount of say, Rs.1.80, that is Rs.98.20 and redeemed at the face value of Rs.100/-. The investors will get a return equal to difference between the maturity value or face value (i.e., Rs.100) and the issue price. Treasury Bills are issued through auctions managed by the Reserve Bank of India usually every Wednesday and payments for the Treasury Bills buyd have to be made on the following Friday. The Treasury Bills of 182 days and 364 days’ tenure are issued on alternate Wednesdays, that is, Treasury Bills of 364 day tenure are issued on the Wednesday preceding the reporting Friday while Treasury Bills of 182 days tenure are issued on the Wednesday prior to a non-reporting Friday. Currently, the notified amount for issuance of 91 day and 182 day Treasury Bills is Rs.500 crore each whereas the notified amount for issuance of 364 day Bill is higher at Rs.1000 crore. Government, at its discretion, can also choose to issue additional amounts of the Treasury Bills by issuing prior notice. An annual calendar of T-Bill issuances for the following financial year is released by the Reserve Bank 8 of India in the last week of March. The Reserve Bank of India also announces the issue details of Treasury bills by way of press release every week. In US it is issued by Fed and is backed by US government. Tenure of US T-bills is 4 weeks, 13 weeks, 26 weeks, or 52 weeks. Generally these are issued in the denomination of USD 1000 and are issued at discount since these are zero coupon bonds. Dated Government Instruments are the Instruments which are longer in term than the T bills. These Instruments pay interest at fixed time periods (usually half yearly) called coupon on the face value and this can be either fixed or floating coupon. The tenor of these Instruments can be up to 30 years. In India, the Public Debt Office (PDO) of the RBI acts as the registry / depository of Government Instruments. This office takes care of all the dealings for these Instruments similar issue, interest payment and repayment of principal at maturity. We generally have fixed coupon Instruments. The nomenclature of a typical dated fixed coupon Government security has the following features – coupon, name of the issuer, maturity and face value. e.g. If the bond is called 7.49% GOI 2017 then it would have these features.
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