How do T-bills differ from other government securities?

T-bills are a type of short-term government security, typically issued with maturities of one year or less. They differ from other government securities like government bonds (G-secs) and State Development Notes in a few key ways:

Maturity:

• T-bills: Short-term, with maturities ranging from a few days to one year.
• Other Government Securities: Long-term, with maturities of 10 years or more.

Investment:

• T-bills: These are issued at a discount to the par value and they are redeemed at their actual value.
• Other Government Securities: Investments in these can be made at a discount, par value, or premium.

Interest Payments:

• T-bills: They are sold at a discount to their face value, and the investor receives the full face value at maturity. No periodic interest is paid.
• Other Government Securities: These securities pay periodic interest in addition to the face value at maturity.

Market Liquidity:

• T-bills: They are extremely liquid due to their short-term nature.
• Other Government Securities: These tend to be slightly less liquid than T-bills because they are held for longer durations, but they are still highly liquid compared to other investments.

To invest in T-bills, refer here.