Primary Market

n the primary market, treasury bills are issued by auction technique.

CALENDAR OF AUCTION FOR TREASURY BILLS

Treasury Bill Day of auction Day of payment
91 day Every Wednesday Following Thursday
182 day Wednesday preceding the non-Reporting Friday Following Thursday
364 day Wednesday preceding the reporting Friday Following Thursday

Salient Features Of The Auction Technique

The auction of treasury bills is done only at Reserve Bank of India, Mumbai.
Bids are submitted in terms of price per Rs 100. For example, a bid for 91-day Treasury bill auction could be for Rs 97.50.
Auction committee of Reserve Bank of India decides the cut-off price and results are announced on the same day.
Bids above the cut-off price receive full allotment; bids at cut-off price may receive full or partial allotment and bids below the cut-off price are rejected.

Types Of Auctions
There are two types of auction for treasury bills:

Multiple Price Based or French Auction: Under this method, all bids equal to or above the cut-off price are accepted. However, the bidder has to obtain the treasury bills at the price quoted by him.
Uniform Price Based or Dutch auction: Under this system, all the bids equal to or above the cut-off price are accepted at the cut- off level. However, unlike the Multiple Price based method, the bidder obtains the treasury bills at the cut-off price and not the price quoted by him.