When friends ask me about “safe short-term options,” I usually start with the meaning of treasury bills. In plain words, a Treasury Bill (T-Bill) is a short-dated promise from the Government of India. I lend money for a few months and get it back at face value on the due date. No suspense, no coupons to track, just a clear start and finish.
I first discovered T-Bills when a fixed deposit matured and I needed that money again in three months. An advisor showed me a 91-day T-Bill. I bought it below ₹100 and received ₹100 at maturity. That small difference became my return. The idea clicked: T-Bills are sold at a discount and redeemed at face value. The RBI runs weekly auctions for 91, 182 and 364 days, and the auction cut-off decides the price. It’s simple once you see it happen once.
Here’s the two-minute explanation I give my cousin who has just started working. Suppose I buy a T-Bill for ₹97 with a face value of ₹100. When it matures, I get ₹100. The ₹3 is the gain for those specific days. If I annualise that, I get the yield. There’s no regular interest coming in between, which means no messiness with payout dates or missed credits.
How do I buy? I use my demat account and place an order on the exchange, or I go through the non-competitive route in primary auctions. Either way, the process is digital and quick. If you prefer to invest in bonds online, T-Bills are the easiest doorway into fixed income because the counterparty is the sovereign.
Why do I keep coming back to them? Three reasons. One, safety. Sovereign backing matters when I’m parking short-term money. Two, liquidity. If life throws up an expense, I can usually sell before maturity with minimal fuss. Three, rate clarity. Because the maturities are short, T-Bill yields move closely with RBI policy, so they help me sense where short-term rates stand without taking corporate credit risk.
There are, of course, a few things I stay mindful of. The first is re-investment risk. When a bill matures, the next auction might clear at a lower yield. The second is price movement if I exit early. Swings are usually small, but they exist. And then there’s taxation. The gain is treated as other income in the year of maturity, so I look at post-tax returns, not just the headline yield.
Over time, I’ve adopted a simple habit: I ladder maturities. I spread money across 91-, 182- and 364-day T-Bills so some part keeps maturing every few months. It smooths my cash flows and reduces the stress of timing. When I finally decide to take a longer view—say, a multi-year government or high-quality corporate bond—I roll the maturing T-Bill into that plan.
If I had to distil the meaning of treasury bills into a single image, I’d call them a well-lit parking bay for idle cash, with a security guard on duty and a clear exit time printed on the ticket. They do not try to be everything. They simply hold money safely for a short period and return it on schedule. For anyone building the discipline of fixed-income investing, they are a clean, confident first step.
