The (RBI) has enabled an auto-bidding facility for investing in (T-bills) via both the website and the app. This auto-bidding facility requires a valid NACH (National Automated Clearing House) mandate for executing the T-Bills order.
With this additional facility, you can invest in T-bills by placing a conditional order that matches your requirements. It’s similar to wanting to buy a stock at Rs 120 when the current market price is Rs 125. You would then put a conditional order saying that as soon as this stock’s price drops to Rs 120, you will go ahead and buy it.
The said: “This facility complements the existing manual bidding option, and allows you to set investment preferences, viz., T-bill tenor, bid amount, bidding frequency and validity period, by creating Auto-bid Rules that are executed automatically once the bidding window of the respective T-bill auction becomes active on the RD portal/App.”
What are the key features of the auto-bidding facility?
The RBI said that you should start by adding a bank account and setting up a . This way, when your conditional order (auto-bidding) is activated, the funds can be withdrawn from your bank account to complete the order.
According to the RBI, key features of the facility are:
- Auto-bidding is available only for T-bills and requires a valid NACH mandate.
- Types of Rules:
1. General Rule: Set the intended T-bill tenor, bid amount, bidding frequency, and period of rule validity. Bids will be auto-placed when the conditions are met.
2. Calendar Rule: Select specific T-bill auction/s from the Quarterly Calendar for Auction of T-bills and specify the bid amount. The rule is to be set before the commencement of bidding of the respective auction on the RD portal/App.
- The rules can be amended, paused or cancelled anytime.
- Auto-bid is funded through NACH mandate linked to your registered bank account in the Retail Direct. Sufficient balance in the registered bank account is needed for funding the Auto-bid.
Email and SMS alerts are sent for Auto-bid Rule creation, amendment, cancellation, expiry, bid placement, etc.For T-bills investors, this auto-bidding feature means that they don’t have to manually submit bids for T-Bills auctions. This can really cut down the time it takes to invest in T-Bills investment if the conditions of the conditional order are satisfied.
What are treasury bills?
Treasury Bills (T-Bills) are money market instruments or short term debt instruments issued by the Government of India. At present, they are issued in three tenors — 91 days, 182 days and 364 days. The Treasury Bills are and pay no interest. Instead they are issued at a discount and redeemed at face value on maturity.
For example: a 91 day Treasury bill of Rs 100 (face value) may be issued at say Rs 98.2, that is, at a discount of Rs 1.9 and would be redeemed at the face value of Rs 100. The return to the investors is the difference between the maturity value or the face value (that is Rs 100) and the issue price).
What are the day count conventions used in calculating bond yields?
According to the RBI website, the day count convention is the method used to determine the holding period (in days) of a bond for calculating the accrued interest. Since using different day count conventions can lead to varying amounts of accrued interest, it is important for everyone in the market to follow a standard day count convention