INVESTMENTS / TREASURY BILLS:
Individuals including NRIs have been granted permission by the Reserve Bank of India to invest in Treasury Bills ( T- Bills).
What are T- Bills?
T- Bills are short term money market instruments issued by RBI on behalf of the Govt. of India. Basically,
- They are Zero coupon bonds issued at a discount to face value and redeemed at par on maturity date.
- No Tax is deducted at source
- Tenor: 91 / 364 days
- The return on T-bills is a function of time and the discount to face value.
Sources of investment by NRIs into T-bills on a repatriable basis may be from:
- NRE A/c ( SB or FD)
- FCNR A/c
- Fresh Inward Remittance
- Instrument drawn by other banks from the above a/cs
- Matured forward contract
RBI has permitted booking of forward contract against face value of T-bills on the maturity date. A finite yield is thus possible insulating the investor against exchange rate fluctuations. However, booking a forward contract is optional to the customer. The return offered by our bank is the sum of the yield on treasury bills and exchange gains,if any.
Booking of a forward contract against NRE Deposits for delivery of foreign currency on maturity date – i.e.the Swap scheme is another investment option for NRIs. The attractiveness of the scheme depends upon the forward premia and the prevailing interest rates on deposits.