Which of the following financial instruments is issued at a discount to its face value and represents a short-term promissory note of the Government of India?

💡 Solution & Explanation

Treasury Bills are short-term money market instruments issued by the Reserve Bank of India on behalf of the Central Government at a discount to their face value and redeemed at par upon maturity, carrying zero default risk. Unlike Certificates of Deposit or Commercial Papers which are issued by commercial banks and corporations respectively, T-Bills serve as a vital tool for managing short-term government cash flow deficits. Banking and economics papers frequently examine the maturity periods and issuing authorities of various money market instruments.