ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Treasury Bills-Broadening the Market

Treasury Bills Broadening the Market DEVIATING from customary practice, the so-called busy season credit policy announced by the Reserve Bank this time comprises essentially of certain changes in debt management policy relating to treasury bills. The changes pertain to the introduction of 182-day treasury bills on a monthly auction basis without rediscounting facility and imposition of penalties on early rediscounting of the existing 91-day treasury bills within 14 days of their purchase from the Reserve Bank. Historically, the treasury bill emerged as a device for raising short-term funds to cover gaps between the government's receipts and expenditure. Its role is, therefore, limited by the duration as well as the purpose for which it is used. Barring a few countries, treasury bills are issued on behalf of the government by the central bank, in discharge of its functions of banker to the government and manager of public debt. In India treasury bills were first issued in October 1917 as a part of the government's measures to raise resources to meet the growing expenditure arising out of the First World War and by the late twenties they had come to be accepted as a regular method of raising short-term funds for the government. The Reserve Bank took over the management of treasury bills in April 1935.

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