Clearing and Settlement

The Treasury Bills are available in physical form if an investor desires so. The market is mostly dominated by institutional players who have a facility to hold the T-bills in scripless form. For this purpose, the investor opens an SGL Account (Subsidiary General Ledger) with RBI who credits the accounts with T-bills subscribed. When a transaction of sale is undertaken between two institutional players, the seller issues an SGL (Subsidiary General Ledger) transfer form specifying the details of the transaction. The SGL transfer form is then lodged by the buyer with the Public Accounts Department of RBI to credit its account by debiting the value of the securities to the seller's account. Usually, interbank trades are settled on the same business day, whereas trades with non-bank counterparties are settled either on the same day or one business day after trade date.

Commercial Papers, Certificates of Deposits, short-term debentures and inter-corporate deposits are alternatives to T-bills. In spite of the low returns, T-bills constitute a viable investment opportunity for cash rich PSUs and corporates due to their liquidity, eligibility for SLR, nominal risk weightage. The scope for capital erosion is almost insignificant. Hence, it is essential to develop treasury bill market as it would provide appropriate ancillary facilities to foster the development of money market instruments.