What is a ‘Treasury bill’? How is it issued?

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Treasury bills are short-term government bonds used to raise internal debt for a period of one year or less. Treasury bills are issued for four periods of 28 days, 91 days, 182 days and 364 days. These various period treasury bills are disposed of as required.

The bill is sold to raise short-term (maximum one year) resources required by the government. The method used in issuance and bidding is the issuance of treasury bills through bidding. Multiple bidding method (American bidding system) is used in bidding. The bidding should be done on the bidding price of the treasury bill.The same person or organization can bid separately or at multiple prices. Bidding of treasury bills should be done through online bidding system. Discount rates are applied to treasury bills instead of interest rates. Discount rates are determined through bidding.

Class A, B and C banks and financial institutions, non-bank financial institutions, organizations as well as the general public can participate in the bidding of the Treasury Bill approved by the Nepal Rastra Bank. When bidding for treasury bills, at least 15 percent of the invoice amount is set aside for non-competitors. Class A, B and C banks and financial institutions are not allowed to participate in the bidding of Treasury Bill as non-competitive.

When speaking as a non-competitor, only the demand amount should be mentioned, not the price. Treasury bills are provided to non-competitive bidders at a weighted average price determined by competitive bidding. In the same bidding, it is not possible to speak from both competitive and non-competitive sides.

When bidding for treasury bill, 2.50 percent of the bid amount should be arranged with earnest money. The bidder who does not have an account in Nepal Rastra Bank should deposit the amount of Earnest Money in the treasury bill application account within the stipulated time and submit the voucher to this department.

The bidder having an account in Nepal Rastra Bank has to maintain the amount of Earnest Money in his account in this bank. Bidders who do not have an account with this bank will be reimbursed by cash or transfer.

In the bidding of treasury bills, a minimum of Rs. 50,000 and a maximum of Rs. The bidding for the treasury bill takes place on Monday of each week and the issue is made the next day, Tuesday.

The results of the bidding are also announced on Tuesday. Information on treasury bill bidding is published on the website of Nepal Rastra Bank (www.nrb.org.np) as well as online bidding system (http: \ obss.nrb.org.np/pd).

The institution that mentions the highest price in the bidding is given first priority and the treasury bill is distributed up to the amount called. On the day after the bidding, on the day of expulsion, the account of the successful bidder who has an account in Nepal Rastra Bank and in case of not having an account, is reconciled by spending the treasury bill application account.The successful bidder is provided a certificate (Advice) with details as proof. In case of issuance of treasury bill, only the remaining amount is deposited after deducting the discount amount and the full amount (face value in the certificate) is paid on the due date.

Certificate of Treasury bill before payment date can be used for repo, direct purchase, statutory liquidity ratio, permanent liquidity facility and interbank transactions. In the case of an individual, a loan can be taken from any bank or financial institution other than this bank by pledging the certificate of treasury bill.The treasury bill can be bought and sold by the buyer and the seller in the form of promissory note. But such transactions should be reported to the National Debt Management Department. There is a provision to levy income tax on the income earned from the investment made in the treasury bill. This is how NRB invites treasury bills.

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