Treasury Bills: The 91-Day Sovereign FD
Zero-coupon, zero credit risk, often beating short FDs — the money-market instrument retail finally has access to.
A Treasury bill is the simplest loan in finance: you give the Government of India money for 91, 182 or 364 days; it gives you back the face valueThe nominal accounting value printed on a share.. No coupons, no fine print — you buy at a discount (say ₹98.30 for a ₹100 bill) and the difference is your return.
Yield ≈ (100 − price) ÷ price × (365 ÷ days)
Buy a 364-day bill at ₹93.40 → (6.60 ÷ 93.40) × (365/364) ≈ 7.08% annualised, sovereign-guaranteed.
The pitch against short FDs writes itself: T-billA short-term government borrowing instrument. yields typically sit AT or ABOVE comparable bank FDA bank deposit locked for a fixed term at a fixed rate. rates, with zero credit risk at ANY size — a ₹2 crore T-billA short-term government borrowing instrument. is exactly as safe as a ₹2 lakh one, while bank deposits are insured only to ₹5 lakh. The trade-offs: returns are taxed at slab (like FDA bank deposit locked for a fixed term at a fixed rate. interest — short-term capital gainsProfit from selling an asset above its purchase price. here), there is no premature-withdrawal counter (you sell in the secondary marketWhere existing securities trade between investors. instead, at market price), and buying requires five minutes of one-time setup (RBI Retail Direct or your brokerAn intermediary licensed to execute your trades.’s goBID) instead of your bank app.
- Tenors — 91, 182, 364 days; auctioned weekly (Wednesdays), settlementHow long after a trade ownership and cash settle. T+1How long after a trade ownership and cash settle..
- Zero-coupon — return = discount to face valueThe nominal accounting value printed on a share.; taxed at slab as short-term gains, no TDS.
- Sovereign — the safest rupee instrument that exists; size-independent safety (vs DICGC ₹5 lakh).
- Access — RBI Retail Direct (free), NSE goBID / brokerAn intermediary licensed to execute your trades. platforms; minimum ₹10,000.
Test yourselfYou have ₹40 lakh from a house sale parked for ~6 months. FD at 6.8% or 182-day T-bill at 6.9%?
T-bill, and not mainly for the 0.1%: ₹40 lakh in one bank FD is ₹35 lakh beyond DICGC insurance, while the T-bill is sovereign-backed for the full amount. Similar yield, same slab taxation, categorically better credit risk at that size.
✓ You learnedT-bills are the sovereign upgrade to the short-term FDA bank deposit locked for a fixed term at a fixed rate.: comparable-or-better yields, perfect credit quality at any amount, weekly availability. Their niche: parking large sums (beyond deposit insurance) and laddering money with known short-dated needs.
FAQs
Can I exit a T-bill before maturity?
Yes — they trade in the secondary market (your Retail Direct or demat holdings can be sold), but liquidity for small retail lots can be thin and the price depends on where yields have moved. For money you might need on an unknown date, a liquid fund is operationally smoother; T-bills shine when the date IS known.