Govt to borrow Rs 4 lakh crore from market via T-bills

The Reserve Bank of India (RBI) recently unveiled its auction calendar for Treasury Bills (T-bills), highlighting the central government’s borrowing plans. According to the calendar:

• 91-day T-bills: ₹1.68 lakh crore
• 182-day T-bills: ₹1.28 lakh crore
• 364-day T-bills: ₹98,000 crore

This increase in T-bill issuance is attributed to tight liquidity conditions in the financial markets.

Key Features of Treasury Bills (T-bills):

1. Money Market Instruments: T-bills are short-term debt instruments issued by the Government of India.
2. Tenors: They are issued in three tenors—91 days, 182 days, and 364 days.
3. Zero Coupon Securities: T-bills do not pay periodic interest. Instead, they are issued at a discount to their face value and redeemed at face value upon maturity.
   • Example: A 91-day T-bill with a face value of ₹100 might be issued at ₹98.20. Upon maturity, the holder receives ₹100, and the difference (₹1.80) is the investor’s return.

Government Securities (G-Secs): G-Secs are debt instruments issued by the Central or State Governments to acknowledge their debt obligations. They can be categorized into:

1. Treasury Bills (T-bills): Short-term securities with maturities of less than one year.
2. Dated Securities: Long-term instruments with maturities ranging from 5 to 40 years, carrying fixed or floating interest rates paid semi-annually.

Issuance and Auctions:

• Conducted by RBI via the E-Kuber platform.
• Retail investors are allowed to participate on a non-competitive basis in select auctions.
• The Public Debt Office (PDO) of the Reserve Bank of India acts as the registry / depository of G-Secs and deals with the issue, interest payment and repayment of principal at maturity.
• Most of the dated securities are fixed coupon securities.

Special Instruments:

• Cash Management Bills (CMBs): Introduced in 2010 for short-term funding needs, with maturities of less than 91 days.
• State Development Loans (SDLs): Long-term instruments issued by State Governments through auctions. Interest is paid semi-annually, and the principal is repaid at maturity.

Participation and Benefits:

The government encourages broader participation in G-Secs to promote retail investment. These instruments are considered safe investments as they carry sovereign guarantees, making them suitable for risk-averse investors looking for stable returns.