Economics • Banking & FinanceEasy
What is the primary objective of introducing 'Treasury Bills' (T-Bills) in the Indian money market?
A. To help the central government fulfill short-term liquidity requirements.✓ Correct Answer
B. To provide long-term capital for infrastructure development.
C. To finance foreign trade deficits of private corporations.
D. To fund long-term agricultural loans through cooperative banks.
💡 Solution & Explanation
Treasury Bills are short-term zero-coupon debt instruments issued by the Reserve Bank of India on behalf of the central government to bridge temporary fiscal deficits and cash flow mismatches. Currently issued in maturities of 91 days, 182 days, and 364 days, they do not pay explicit interest but are sold at a discount and redeemed at face value. Long-term developmental capital or infrastructure funding is instead channeled through dated government securities and bonds.
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