Cash Management Bills, Treasury Bills

CMBs are short-term government debt instruments issued to bridge temporary mismatches between government revenue and expenditure.

CMBs generally have a maturity of less than 91 days and can sometimes have a tenure of only a few days.

Unlike T-Bills, CMBs are issued on an as-needed basis to meet the government‘s immediate cash requirements.

CMBs are issued at a discount, and the difference between the issue price and redemption value represents the investor‘s return.

CMBs are government-backed securities and are therefore considered to have high credit quality.

Banks, financial institutions, mutual funds and other institutional investors are the primary participants in CMBs.

CMBs are issued through auctions, with competitive and non-competitive bidding mechanisms.

CMBs help the government bridge temporary mismatches between revenue inflows and expenditure outflows.

CMBs provide a temporary funding solution and can help the government manage short-term liquidity requirements.

Under competitive bidding, institutional investors submit bids specifying the discount rate they are willing to accept.

Non-competitive bidders do not specify a discount rate and accept the cut-off rate determined through the auction.

At maturity, the government redeems the CMB by paying its face value to the investor.

CMBs are generally shorter than 91 days, while the stated T-Bill maturities are 91, 182 and 364 days.

CMBs are specifically designed to help governments manage temporary cash flow mismatches.

CMBs can contribute to liquidity in the financial system and complement short-term money market operations.

Treasury Bills are short-term debt instruments issued by the government to meet short-term borrowing and liquidity requirements.

In India, Treasury Bills are issued by the RBI on behalf of the Government of India.

The stated Treasury Bill maturities are 91 days, 182 days and 364 days.

T-Bills are issued below face value and redeemed at face value at maturity.

T-Bills are zero-coupon instruments, so they do not pay periodic interest; the return comes from the difference between purchase price and face value.

Since T-Bills are issued at a discount and redeemed at face value, the difference represents the investor‘s return.

Government backing makes T-Bills one of the safest short-term investment instruments.

T-Bills are marketable securities and can be traded in the secondary market, providing liquidity.

The provided material states that the minimum denomination for T-Bills in India is ₹25,000 and multiples thereof.

The RBI conducts Treasury Bill auctions in India on behalf of the Government of India.

In competitive bidding, investors submit bids specifying the yield they seek.

Non-competitive bidders do not specify a yield and accept the yield determined through the auction.

T-Bills help the government meet short-term funding needs and also provide a liquid investment avenue.

T-Bill yields are commonly used as a benchmark for short-term interest rates.

T-Bills are short-term, zero-coupon government securities, while government bonds are generally longer-term and pay regular interest.