Features

Form
The treasury bills are issued in the form of promissory note in physical form or by credit to Subsidiary General Ledger (SGL) account or Gilt account in dematerialised form.

Minimum Amount Of Bids Bids for treasury bills are to be made for a minimum amount of Rs 25000/- only and in multiples thereof.

Eligibility
All entities registered in India like banks, financial institutions, Primary Dealers, firms, companies, corporate bodies, partnership firms, institutions, mutual funds, Foreign Institutional Investors, State Governments, Provident Funds, trusts, research organisations, Nepal Rashtra bank and even individuals are eligible to bid and purchase Treasury bills.

Repayment
The treasury bills are repaid at par on the expiry of their tenor at the office of the Reserve Bank of India, Mumbai.

Availability
All the treasury Bills are highly liquid instruments available both in the primary and secondary market.

Day Count
For treasury bills the day count is taken as 365 days for a year.

Yield Calculation
The yield of a Treasury Bill is calculated as per the following formula:

Y = (100-P)*365*100
  P*D
   
Wherein  Y = discounted yield
  P= Price
  D= Days to maturity

Example :
A cooperative bank wishes to buy 91 Days Treasury Bill Maturing on Dec. 6, 2002 on Oct. 12, 2002. The rate quoted by seller is Rs. 99.1489 per Rs. 100 face values. The YTM can be calculated as following:

     - The days to maturity of Treasury bill are 55 (October – 20 days, November – 30 days and December – 5 days)

     - YTM = (100-99.1489) x 365 x 100/(99.1489*55) = 5.70%

Similarly if the YTM is quoted by the seller price can be calculated by inputting the price in above formula.