| Treasury Bills are short-term discount instruments, which are issued by the Government
of India through RBI. These Bills are now issued for only two tenures, namely
91 days and 364 days. These instruments make a very liquid market especially
in the short end of the yield curve. In fact by virtue of their liquidity,
they form a significant portion of total turnover in the sovereign paper market.
The Monetary and Credit Policy for 2001-2002 has announced that the 14-day
Treasury Bill and 182-day Treasury Bill auctions will be discontinued and
instead, the notified amount in the 91-day Treasury Bill auctions will be
increased to Rs.250 crore w.e.f. May14, 2001. The notified amount in the 364-day
Treasury Bill auction will remain at Rs.750 crore. Also, the auctions of 91-day
Treasury Bills will now be conducted on every Wednesday with payment on the
following Friday and the auctions of 364-day Treasury Bills will be conducted
on Wednesdays preceding the reporting Friday with payment on the following
Friday. It is proposed to synchronize the dates of payment for both 91-day
and 364-day Treasury Bills. As such, both the 91-day and 364-day Bills will
mature on same dates and together they can provide adequate fungible stock
of Treasury Bills of varying maturities in the secondary market. The market
clearing yields and the increased floating stocks which are fungible are expected
to activate the secondary market in Treasury Bills.
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