Q.Write a short note on: Treasury Bill.

A Treasury Bill is a short-term (up to one year) money-market instrument issued at a discount by the RBI on behalf of the Government of India to meet short-term funding needs; it is safe, liquid and pays no interest, the gain being the discount.

Treasury Bill

A Treasury Bill (T-Bill) is one of the main instruments of the money market, which deals in short-term funds. It is issued by the Reserve Bank of India on behalf of the Government of India to borrow money for a short period. This is a 2-mark AP Inter 2nd-year Commerce previous-year question; AP's commerce syllabus aligns with the NCERT/CBSE commerce curriculum here.

Key points:

• It is a short-term instrument with a maturity of less than one year (91 days, 182 days or 364 days).
• It is a promissory note / bearer security of the Government.
• It is issued at a discount (below face value) and repaid at full face value on maturity; the difference is the investor's income. …