Is investing in T-bills via SIP a smart move compared to FDs?
The RBI now permits individuals to invest in Treasury bills (T-bills) via SIPs on its retail direct platform. An analysis reveals that bank fixed deposits offer higher returns in the one-year segment, while T-bills perform better in shorter tenures.
Nearly half a million users have registered on this platform.
Mumbai: The Reserve Bank of India (RBI) recently allowed individuals to invest in Treasury bills (T-bills) via the systematic investment plan (SIP) on the RBI retail direct platform. An ET analysis shows that bank fixed deposits offer at least 68 basis points higher returns compared to T-bills in the one-year segment. Conversely, T-bills fare better in 91-, and 182-day (3 and 6 months) segments offering around 55 bps over FDs of similar maturities.
The RBI had earlier opened government securities trading to retail investors, and the decision to allow investment in T-bills is aimed at further enhancing retail participation in the bond market. With a minimum investment requirement of ₹10,000, investors can also auto-bid with options to invest and reinvest on the platform. Auto bidding will enable investors to automate their participation in weekly T-bill auctions that happen every Wednesday. Investors can choose an amount to be invested and the system would place bids on their behalf. That amount would be invested at the cut-off rate. Reinvestment of a maturing T-bill can also be automated on the platform.
The RBI launched its retail direct platform in November 2021 with an aim to boost retail participation in government securities. Even as the number of registrations have doubled in the past two years, the total number does not indicate strong participation, experts say.
Nearly half a million users have registered on this platform.
