The central government will borrow ₹3.94 lakh crore via T-bills in January-March FY24, up from ₹2.47 lakh crore in October-December, per RBI’s auction calendar.
About Government Securities (G-Secs)
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Flexibility in Auction: RBI, in consultation with the government, retains the flexibility to adjust auction amounts and timing based on market conditions and requirements.
Zero-Coupon SecurityA zero-coupon security is a debt instrument that doesn’t pay periodic interest (coupons) to the holder. Instead, it’s sold at a deep discount to its face value. At maturity, the investor receives the full face value of the bond. |
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| Advantages of Treasury Bills | Disadvantages of Treasury Bills |
| Safety and Security: Backed by the Indian government, making them low-risk investments. | Liquidity Tightness: High borrowing through T-Bills can indicate constrained liquidity in the financial system. |
| Liquidity: Can be easily sold in the secondary market before maturity, offering ease of exit. | Market Sensitivity: Increased supply of T-Bills may impact short-term interest rates and market stability. |
| Short-Term Investment Horizon: Ideal for meeting short-term financial goals like emergency funds or vacations. | Investor Concentration: Predominantly held by financial institutions, limiting retail investor participation. |
| Diversification: Helps reduce overall portfolio risk by adding a low-risk asset class. | Limited Returns: Yields are generally lower compared to other investment options with higher risks. |
By addressing these challenges and leveraging effective monetary tools, the government and RBI can ensure stable borrowing conditions and robust financial market operations.
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December 30, 2024
