182-Day T-Bills

Following the Sukhamoy Chakravarty Committee recommendations, in November, 1986, 182-day T-bills were introduced in order to develop the short-term money market and also to provide an additional avenue for the Government to raise financial resources for its budgetary expenditure. Initially, these were the first type of treasury bills to be auctioned on monthly basis without any rediscounting from the RBI. Thus, the first step of market oriented discount rate has come into existence. The state governments and provident funds were not allowed to participate in these auctions. To impart an element of flexibility, the Central Bank was not announcing the amount in advance. The market participants were allowed to bid the amount and price of their choice. The authorities would determine the cut-off discount rate and the amount of T-bills sold in an auction. They were issued with a minimum lot size of Rs.1 lakh and multiples thereof. These auctions were monthly in the beginning but later in 1988, they were made fortnightly. These bills were eligible securities for Statutory Liquidity Ratio purpose and for borrowing under standby refinance facility of the RBI. The 182-day T-bills had an interest rate that was relatively market determined and this made it possible for the development of a secondary market for it. Nevertheless, till 1987, 182-day T-bills market could not emerge as an integral part of the money market. These bills were discontinued and in place of which 364-day T-bills emerged.

In April, 1998, these bills were reintroduced in order to obtain a continuous yield curve for a period of one year. These bills were again discontinued from May, 2001 up to March, 2005. These bills were reintroduced with effect from April, 2005.