Which of the following combinations of tenors of Treasury bills issued by Government of India is correct?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. 91 days, 182 days, 364 days.
Treasury Bills (T-Bills) are short-term debt instruments issued by the Government of India to meet its short-term funding needs. These bills are issued at a discount and redeemed at par, meaning they don’t pay interest but the difference between the issue price and face value serves as the return for the investor.
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The Government of India issues three types of Treasury Bills with the following tenors (maturity periods):
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91 days: A short-term instrument, often used for managing liquidity in the financial system.
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182 days: A medium-term instrument providing slightly higher returns compared to 91-day T-bills.
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364 days: A longer tenure T-bill offering higher returns due to its relatively longer period.
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These tenors are aligned with the government's liquidity needs and the RBI's monetary policy tools to manage inflation, interest rates, and currency stability.
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Purpose: Treasury Bills are issued to the public, banks, and financial institutions to raise short-term funds and control liquidity in the market.