Treasury bills are short-term debt instruments issued by the Government of India and auctioned by the Reserve Bank of India on its behalf. They are currently available with maturities of 91 days, 182 days and 364 days. T-bills do not pay periodic interest. Instead, they are issued below their face value and redeemed at face value on maturity.
Put simply, the treasury bills meaning is straightforward: an investor lends money to the government for less than a year, and the difference between the purchase price and maturity value forms the gain before tax and applicable costs. You may also see them referred to as T bills or T-bills.
What are treasury bills?
Treasury bills, commonly called T-bills, are short-term money-market instruments issued by the Government of India. The RBI conducts their auctions and manages the issuance process on the government’s behalf.
T-bills have an original maturity of less than one year. Unlike coupon-paying government bonds, they do not make periodic interest payments. The return becomes known through the difference between the amount paid and the face value received at maturity.
Source: Reserve Bank of India, Government Securities Market in India – A Primer.
How do treasury bills work in India
Treasury bills in India are sold through auctions conducted by the RBI. Retail investors can participate in the primary market through non-competitive bidding. Under this facility, they specify the amount they wish to invest instead of quoting a price or yield.
If the bid is allotted, the securities are issued at the weighted average price determined from the accepted competitive bids. Allotment may be partial if the total non-competitive bids exceed the amount available for that segment.
Investors can hold a T-bill until maturity, when the face value is credited, or sell it in the secondary market before maturity. An early sale may take place above or below the purchase price, depending on interest rates, demand and market liquidity.
Source: Reserve Bank of India, Non-Competitive Bidding Facility; Treasury Bills: Full Auction Result dated July 22, 2026.
Why the government issues treasury bills
The Government of India issues treasury bills to meet its short-term cash requirements. They form part of the government’s short-term market borrowing programme, while dated government securities are generally used for longer-term borrowing requirements. The RBI conducts T-bill auctions and manages the securities as the government’s debt manager.
Types of treasury bills and their maturity periods
Treasury bills in India are currently issued in three standard maturity periods:
| Type of treasury bill | Maturity period | What it means |
| 91-day Treasury Bill | 91 days | The shortest standard T-bill maturity, covering roughly three months |
| 182-day Treasury Bill | 182 days | A maturity period of roughly six months |
| 364-day Treasury Bill | 364 days | The longest standard T-bill maturity, covering nearly one year |
Source: Reserve Bank of India, Auction of 91-Day, 182-Day and 364-Day Treasury Bills, July 24, 2026.
How do T-Bills generate gains?
T-bills do not pay periodic interest. If held until maturity, the investor’s gain comes from the difference between the purchase price and the face value received.
For example, suppose a T-bill with a face value of ₹100 is purchased for ₹97. If it is held until maturity, the government redeems it for ₹100. The difference of ₹3 is the gain before tax and other applicable costs.
The ₹3 difference should not automatically be read as a 3% annual return. T-bill yields are annualised and take into account the purchase price and the number of days remaining until maturity.
The figures shown are for illustrative purpose only.
Also Read: What are the opportunities and risks of investing in emerging markets?
Features and benefits of treasury bills
T-bills combine short maturity periods with sovereign credit backing and a relatively straightforward return structure. Their main features include:
Sovereign backing and low credit risk
Treasury bills are obligations of the Government of India and carry sovereign credit backing. They are generally considered to have negligible credit risk in the domestic market. However, this does not remove market risk if they are sold before maturity, or risks relating to inflation and reinvestment.
Short maturity choices
Investors can choose among 91-day, 182-day and 364-day maturities, depending on when they expect to require the money.
No periodic interest payments
T-bills are zero-coupon securities and do not provide monthly, quarterly or annual interest payments. If they are held until maturity, the gain is the difference between the purchase price and face value. If sold earlier, the transaction may result in a gain or loss depending on the market price.
Ability to sell before maturity
T-bills are marketable securities and may be sold in the secondary market. However, the available price and ease of selling can vary with interest rates, demand and market liquidity.
Access through non-competitive bidding
Retail investors can participate in primary T-bill auctions without selecting a price or yield. If allotted, their securities are issued at the weighted average price determined from accepted competitive bids. Allotment may be partial when non-competitive demand exceeds the amount available.
Transparent auction-based pricing
Prices and yields are determined through RBI auctions. Auction notifications and results allow investors to review the maturity, cut-off price and implicit yield before evaluating subsequent issuances.
Limitations of treasury bills
Treasury bills also have limitations that should be considered:
- Lower return potential: T-bills may offer lower return potential than investments that involve greater credit, duration or market risk.
- Inflation risk: If inflation exceeds the T-bill yield, the investor’s inflation-adjusted return may be low or negative.
- Market price risk: An investor selling before maturity may receive more or less than the purchase price as interest rates and market conditions change.
- Reinvestment risk: When a T-bill matures, prevailing yields may be lower when the money is reinvested.
- No regular income: T-bills do not make periodic interest payments and may therefore be unsuitable for investors who require a regular cash flow.
- Limited role in long-term growth: Their short maturity and relatively lower risk generally make them more relevant to short-term cash management than long-term wealth creation.
Yield rate on treasury bills
Treasury bill yields are determined through RBI auctions and may change from one auction to another. They are influenced by factors such as prevailing interest rates, market liquidity, demand for government securities and the time remaining until maturity.
At the RBI auction held on July 22, 2026, the following weighted average prices and yields were recorded:
| T-bill maturity | Weighted average price | Weighted average yield |
| 91 days | ₹98.6855 | 5.3427% |
| 182 days | ₹97.2852 | 5.5964% |
| 364 days | ₹94.5798 | 5.7466% |
Retail investors participating through non-competitive bidding receive allotment at the weighted average price, subject to the available allocation. These yields relate only to the July 22, 2026 auction, and the yield available in a subsequent auction may differ.
Source: Reserve Bank of India, Treasury Bills: Full Auction Result, July 22, 2026.
Taxation on treasury bills in India
Gains from treasury bills are taxable. When T-bills are held as capital assets, the difference between the sale or redemption value and the acquisition cost is generally treated as a short-term capital gain because Treasury Bills mature within 364 days.
Short-term capital gains from government securities are generally taxed at the rates applicable to the taxpayer. The treatment may differ if the securities are held as stock-in-trade or as part of a business. Investors should refer to the rules applicable to their circumstances and the relevant tax year.
Source: Income Tax Department, Capital Gains guidance.
The tax information in this article is based on prevailing laws at the time of publishing the article and is subject to change. Please consult a tax professional or refer to the latest regulations for up-to-date information.
Who should consider investing in treasury bills?
Treasury bills may be relevant to investors who have surplus money available for a known period and prefer an instrument with sovereign credit backing. The 91-day, 182-day and 364-day options may help align an investment with a short-term expense or cash requirement.
They may be less suitable for someone seeking regular interest payments, higher long-term growth potential or protection from inflation. Investors who may need to withdraw before maturity should also consider that the secondary-market price can move before choosing a T-bill.
How to invest in treasury bills in India
Retail investors can invest in treasury bills directly through RBI Retail Direct or through an approved aggregator or facilitator that provides access to government-security auctions. Approved facilitators may include scheduled banks, primary dealers, specified stock exchanges and other entities permitted by the RBI.
Investing through RBI Retail Direct
- Open a Retail Direct Gilt account and complete the required KYC and bank-account verification.
- Check the RBI auction calendar and review the available 91-day, 182-day and 364-day T-bills. Auctions are generally held on Wednesdays, although the date may change because of holidays or other considerations.
- Select a T-bill and place a non-competitive bid by entering the amount you wish to invest.
- Invest at least ₹10,000 in face value and thereafter in multiples of ₹10,000.
- Fund the bid before the auction closes.
- If allotted, the T-bill will be credited to the Retail Direct Gilt account at the weighted average auction price. Allotment may be partial if non-competitive demand exceeds the available allocation.
- Hold the security until maturity or place a sell order through the secondary-market facility.
Source: RBI Retail Direct Scheme FAQs; RBI Treasury Bill auction calendar and auction results.
Investing through an intermediary
Approved banks, primary dealers, specified stock exchanges and other RBI-permitted aggregators or facilitators may provide access to government-security auctions. Account requirements, charges and available services may differ across platforms.
Getting indirect exposure through a mutual fund
Some debt and money-market mutual funds may hold T-bills, but an investor in such a fund owns units of the mutual fund scheme rather than the underlying T-bill directly. Returns depend on the scheme’s complete portfolio, expenses and changes in its net asset value.
Also Read: Flexi cap funds: Exploring growth potential in emerging markets
Conclusion
Treasury bills may be useful when you want to set aside money for 91 days, 182 days or 364 days and can preferably hold the investment until maturity. Before investing, match the maturity date to when you may need the money, compare the post-tax yield with other short-term options and consider the effect of inflation. Selling before maturity is possible, but the price may be higher or lower than the amount originally paid.
FAQs
What are treasury bills (T-Bills)?
Treasury bills, or T-bills, are short-term debt instruments issued by the Government of India. They are available with maturities of 91 days, 182 days and 364 days and are redeemed at face value on maturity.
How do Treasury Bills work?
Treasury Bills are issued below their face value and redeemed at face value on maturity. The difference between the purchase price and the maturity value is the investor’s return. They can also be sold in the secondary market before maturity.
What are the different types of Treasury Bills in India?
The Government of India currently issues three types of Treasury Bills: 91-day, 182-day and 364-day T-bills. They work in the same way, with the primary difference being their maturity periods.
What is the minimum investment required for treasury bills?
The minimum bid for Treasury Bills through RBI Retail Direct is currently ₹10,000 in face value. Further bids must be made in multiples of ₹10,000.
Do Treasury Bills pay interest?
No. Treasury Bills are zero-coupon securities and do not pay periodic interest. If held until maturity, the gain comes from the difference between the discounted purchase price and the face value received.
Are treasury bills in India risk-free?
Treasury Bills carry sovereign credit backing and are generally considered to have negligible credit risk in the domestic market. However, they are not free from all risks. Their price may change if sold before maturity, while inflation and reinvestment conditions can affect the value of the gain.
Can retail investors buy treasury bills?
Yes. Retail investors can buy Treasury Bills through RBI Retail Direct or an approved aggregator or facilitator. RBI Retail Direct allows investors to participate in primary auctions through non-competitive bidding and to buy or sell government securities in the secondary market.
Can treasury bills be sold before maturity?
Yes, Treasury Bills can be sold in the secondary market before maturity. However, the selling price may be higher or lower than the purchase price, depending on interest rates, demand and prevailing market conditions.
Is a T-bill better than an FD?
A T-bill is not necessarily better than a fixed deposit. T-bills carry sovereign credit backing and do not pay regular interest, while FDs offer a stated interest rate and may provide periodic payouts. The choice depends on the tenure, post-tax return, liquidity needs and preferred form of income.
How does inflation affect treasury bills?
Inflation reduces the real, or inflation-adjusted, return from Treasury Bills. If the T-bill yield is lower than the inflation rate during the investment period, the purchasing power of the invested money may decline.
