Treasury Bill(Zero coupon Bonds): 

(i) Meaning: Treasury Bill(or T-bills) is an instrument(in the form of promissory note) of short term borrowing by the government which is issued by the Reserve Bank of India on behalf of the Government of India at discount for maturing in less than one year. 

(ii) Purpose: These are issued to meet short term requirements of funds. 

(iii) Period: These are issued for a period of 14 to 364 days. 

(iv) Amount: These are issued for a minimum amount of 25,000 and in multiples thereof. 

(v) Issue price: These are issued at a discount and are repaid at par. No interest is payable on these securities. 

(vi) Safety: These are considered as safe because of soundness of issuer i.e. RBI. 

(vii) Liquidity: These are highly liquid. 

(viii) Negotiability: These are negotiable instruments i.e. they are freely transferable by endorsement and delivery. 

(ix) Example: Suppose an investor purchases a 91 days Treasury bill with a face value of Rs.1,00,000 for Rs.94,000.By holding the bill until the maturity date, the investor receives Rs.1,00,000.The difference of Rs.6,000 between the proceeds received at maturity and the amount paid to purchase the bill represents the interest received by him.