The RBI has announced its intention to start issuing 182 day T-Bills shortly. The minimum denomination can be as low as Rs100, but in practice most of the bids are large bids from institutional investors who are allotted T-Bills in dematerialized form. There is a notified value of bills available for the auction of 91 day T-Bills which is announced 2 days prior to the auction. There is no specified amount for the auction of 14 and 364 day T-Bills. The result is that at any given point of time, it is possible to buy T-Bills to tailor one's investment requirements.
Potential investors have to put in competitive bids at the specified times.
The cut off is determined by the RBI depending on the amount being auctioned, the bidding pattern etc. By and large, the cut off is market determined although sometimes the RBI utilizes its discretion and decides on a cut off level which results in a partially successful auction with the balance amount devolving on it. This is done by the RBI to check undue volatility in the interest rates. Apart from the above money market instruments, certain other short-term instruments are also in vogue with investors. These include short-term corporate debentures, Bills of exchange and promissory notes.