The Secret Vault: A Treasury Bill Story

In the heart of Financeville, where skyscrapers gleamed under golden sunsets and stock tickers never stopped flashing, lived Mr. Patel, a seasoned businessman known for his cautious approach to investing.

Patel had spent decades building a stable import-export business, but as he neared retirement, he wanted a low-risk place to park his money. He had heard about stocks, mutual funds, and corporate bonds, but none of them seemed truly "safe."

One evening, as Patel sat in the famous Gold Street Café, sipping masala chai, his old friend Rohan, a banker, joined him.

The Introduction to Treasury Bills

Rohan leaned back in his chair and smiled. “Patel, I know you’re looking for a safe investment. Have you ever considered Treasury Bills?”

Patel furrowed his brows. “Treasury Bills? You mean, like government bonds?”

“Not exactly,” Rohan said, stirring his tea. “Think of them as short-term IOUs issued by the government. The best part? They are backed by the government itself, making them virtually risk-free.”

Patel leaned in, intrigued. “So, how do I earn money from this?”

How Treasury Bills Work

Rohan took out a notepad and scribbled an example.

“Let’s say the Reserve Bank of Financeville issues a 91-day Treasury Bill with a face value of ₹100,000. But instead of selling it at ₹100,000, they offer it at a discounted price of ₹98,000.”

Patel nodded. “So I buy it at ₹98,000 today.”

“Exactly. And in 91 days, when the bill matures, the government pays you ₹100,000. Your profit is the difference: ₹2,000.”

Patel’s eyes widened. “So there’s no interest payment?”

“No direct interest,” Rohan confirmed. “The difference between the purchase price and face value is your return. That’s called a discounted security.”

Different Types of Treasury Bills

Patel, now genuinely interested, asked, “And how long do these Treasury Bills last?”

Rohan ticked off the options on his fingers.

1. 91-day Treasury Bills (matures in ~3 months)
2. 182-day Treasury Bills (matures in ~6 months)
3. 364-day Treasury Bills (matures in ~1 year)

“You can choose based on how long you want to invest. Shorter duration means quicker access to cash,” Rohan added.

The Safety and Liquidity Factor

Patel was still skeptical. “What if I need my money before the bill matures?”

“That’s the beauty of it,” Rohan grinned. “Treasury Bills are highly liquid. If you need cash earlier, you can sell them in the secondary market before maturity. Banks, financial institutions, and investors are always looking to buy them.”

Patel stroked his chin. “So, no risk of losing money?”

“Not unless the government defaults,” Rohan laughed. “And when was the last time that happened?”

Patel chuckled. “Fair point.”

Tax Benefits and Competitive Returns

“What about taxes?” Patel asked.

“Good question,” Rohan said. “Since there’s no interest, there’s no TDS (Tax Deducted at Source) on Treasury Bills. But the profit you earn is taxed as capital gains.”

Patel smirked. “So, it’s safer than stocks, more liquid than real estate, and I don’t have to worry about defaults.”

“Bingo!” Rohan said. “And if you invest smartly, you can reinvest your earnings into new Treasury Bills, creating a cycle of safe returns.”

Taking the Leap

As the waiter cleared their cups, Patel sat back, impressed. “I never thought government securities could be this interesting.”

Rohan grinned. “Finance is full of surprises. Now, are you ready to invest?”

Patel smiled. “Let’s start with ₹10 lakh in 91-day Treasury Bills. I like knowing my money is safe and growing—even if slowly.”

And just like that, Mr. Patel took his first step into the world of Treasury Bills, enjoying peace of mind while his money quietly worked for him.

[Finance]