Money market instruments
Treasury bills, commercial paper, certificates of deposit, call money and TREPS: who borrows, and for how long
RBI directions as on 12 October 2026; market figures as on 31 August 2026
Verified 12 October 2026
For training and education only. Not investment advice.
Trainer notes
Open by asking the room: where does a bank go if it is short of cash at four in the afternoon, and where does a liquid fund put yesterday's inflows by tomorrow morning? Both answers are in the money market. This deck follows the RBI toolkit deck and uses its terms: repo rate, SDF, MSF and the corridor.
The money market is where money is lent and borrowed for 1 day to 1 year.
The Government, banks and companies use it to cover short gaps in cash. Lenders use it to earn something on money they will need back soon.
Trainer notes
The one-year line is a convention, and it is the one RBI's directions on term money, commercial paper and certificates of deposit use. Anything longer is usually called the bond or capital market.
The instruments at a glance
| Instrument | Who borrows | For how long | What to know |
|---|---|---|---|
| Treasury bill | Government of India | 91, 182 or 364 days | Sold at a discount and repaid at face value. No interest payment. Minimum ₹10,000. |
| Commercial paper (CP) | Companies, NBFCs and some other bodies | 7 days to 1 year | Unsecured promissory note, issued at a discount. Minimum ₹5 lakh. Rating of at least A3. |
| Certificate of deposit (CD) | Banks | 7 days to 1 year | Issued only in demat form, at a discount or with a coupon. Minimum ₹5 lakh. |
| Call, notice and term money | Banks and primary dealers only | 1 day; 2 to 14 days; 15 days to 1 year | Unsecured loans among themselves, with no collateral. |
| Tri-party repo (TREPS) | Members: banks, mutual funds, insurers, companies, others | Overnight or longer terms | Borrowing against securities given as collateral. A clearing corporation stands between the two sides. |
Sources: RBI FAQs on the Government Securities Market; RBI Master Directions on CP (2024), CDs (2021) and Call, Notice and Term Money (2021); CCIL, Tri-party Repo.
Trainer notes
Other issuers of CP include all-India financial institutions, InvITs and REITs, and bodies corporate with net worth of at least ₹100 crore. CDs are issued by scheduled commercial banks, regional rural banks and small finance banks. 'Banks' in the call market includes regional rural, co-operative, small finance and payment banks. A 25 June 2026 RBI draft proposes wider term-money participation; the 2021 Directions apply until a final version is issued. Cash Management Bills are like Treasury bills but under 91 days.
How a Treasury bill pays
THE SET-UP
A 91-day Treasury bill has a face value of ₹100.
Assume it is bought at auction for ₹98.50.
It pays no interest. After 91 days the Government repays ₹100.
- The discount is ₹100 − ₹98.50 = ₹1.50 on every ₹100 of face value.
- Return over the 91 days = ₹1.50 ÷ ₹98.50 = 1.5228%.
- As a yearly rate: 1.5228% × 365 ÷ 91 = 6.11%. Auction results report the yield on this basis.
- On the minimum lot of ₹10,000 face value: pay ₹9,850 today, receive ₹10,000 after 91 days, a gain of ₹150.
Result: The price is what is quoted; the yield is worked out from it. A lower price means a higher yield.
Illustration with an assumed price. It is not the price or yield of any actual Treasury bill.
Trainer notes
Do the division with the room. The same sum reproduces RBI's published figures: in the auction result of 27 August 2026 the 91-day cut-off price was ₹98.7046 and the yield RBI reported was 5.2640%; (100 − 98.7046) ÷ 98.7046 × 365 ÷ 91 gives 5.2640%. Commercial paper is also issued at a discount. The yearly rate here is a simple rate, with no compounding.
How a tri-party repo (TREPS) works
A repo is a loan backed by securities. In a tri-party repo an agent sits between borrower and lender.
Collateral goes in
A borrower places eligible securities with the clearing corporation, CCIL. Their value sets how much it can borrow.
Orders are matched
Borrowers and lenders place orders on the TREPS screen. Matching is anonymous.
CCIL stands in the middle
It is the central counterparty to every trade and the tri-party agent that looks after collateral and settlement.
The loan is repaid
At the end of the term the borrower repays with interest. On 31 Aug 2026 almost all deals were overnight; longer terms are also offered.
Sources: CCIL, Tri-party Repo page; CCIL notification CCIL/L&S/18/114, 29 Oct 2018; RBI Money Market Operations, 1 Sep 2026.
Trainer notes
TREPS began on 5 November 2018, when it replaced the older Collateralised Borrowing and Lending Obligation (CBLO). Orders are in lots of ₹5 lakh, and settlement can be on the same day or the next. CCIL's page says terms run up to the next 7 days and to three month-end dates. The amount a member can borrow is the value of its collateral after a haircut, and CCIL prescribes which securities are eligible. 'Most deals are for one day' rests on RBI's figures for 31 August 2026: ₹4,73,195 crore overnight against ₹2,775 crore for longer terms. Mutual funds, which are not in the call market, are among the members here.
Where overnight money changed hands
| Volume (₹ lakh crore) | |
|---|---|
| Call money | 0.13 |
| Tri-party repo | 4.73 |
| Market repo | 1.74 |
| Corporate bond repo | 0.06 |
Read the chart
- Tri-party repo: ₹4,73,195 crore, 71% of that day's overnight volume.
- Call money, the unsecured market: ₹12,984 crore, about 2%.
- Market repo: ₹1,73,658 crore. Repo in corporate bonds: ₹6,140 crore.
- Weighted average rates: call 5.18%, tri-party repo 4.96%, market repo 5.00%.
Source: RBI press release 'Money Market Operations as on August 31, 2026', 1 Sep 2026. Shares computed from the four overnight segments.
Trainer notes
One day's figures, shown with a lag of at least 30 days in line with SEBI's norms on price data used for education. Volumes swing from day to day. A market repo is a repo dealt between two parties without a tri-party agent. Market repo was 26% of the total. Total of the four segments: ₹6,65,978 crore; 4,73,195 ÷ 6,65,978 = 71.1% and 12,984 ÷ 6,65,978 = 1.9%.
The call rate and RBI's corridor
Weighted average call rate
The average rate on a day's call money deals, weighted by the size of each deal. Usually shortened to WACR.
RBI's operating target
RBI manages the amount of cash in the banking system so that the WACR stays close to the policy repo rate.
The corridor
The SDF rate, 0.25 percentage point below the repo rate, is the floor. The MSF rate, 0.25 point above, is the ceiling.
On 31 August 2026
Repo 5.25%, SDF 5.00%, MSF 5.50%. The WACR was 5.18%, inside the corridor. Tri-party repo averaged 4.96%, just below the floor.
Sources: RBI, Monetary Policy overview page (operating target, corridor); RBI Money Market Operations, 1 Sep 2026; RBI Current Rates, 1 Sep 2026 (policy rates).
Trainer notes
The repo rate is 5.50% from 7 October 2026, so the corridor now runs from 5.25% to 5.75%; August figures are used because market rates are shown with a 30-day lag. On 31 August 2026 tri-party repo averaged below the SDF rate; RBI gives no reason. A common reading is that lenders without SDF access, such as non-banks, also lend there. SDF has been the floor since 8 April 2022.
Where things stand
Late August 2026. The repo rate was 5.25% then; it has been 5.50% since 7 October 2026.
- 91-DAY T-BILL YIELD
- 5.26%Cut-off yield in the result RBI published on 27 August 2026. 364-day bill: 5.80%.
- AVERAGE CALL RATE
- 5.18%Weighted average on 31 August 2026. Deals ranged from 4.55% to 5.25%.
- CDs, ₹ LAKH CRORE
- 6.36₹6,35,985 crore of certificates of deposit outstanding on 31 August 2026.
- CP, ₹ LAKH CRORE
- 6.40₹6,39,857 crore of commercial paper outstanding on 31 August 2026.
Sources: RBI press releases, T-bill auction result (27 Aug 2026) and Money Market Operations (1 Sep 2026); RBI Bulletin, September 2026, Tables 28 and 29.
Trainer notes
Market figures are shown with a lag of at least 30 days, in line with SEBI's norms on price data used for education. Refresh these at each month-end, using market figures that are at least 30 days old. The auction result is published every week, the money market release every working day and the Bulletin every month. Do not comment on where rates will go next.
How an individual reaches this market
Treasury bills, directly
On RBI Retail Direct an individual can bid for Treasury bills from ₹10,000, and can set up auto-bidding to reinvest the money when a bill matures.
Through debt funds
Overnight, Liquid and Money Market Funds hold these instruments. Together they held ₹11,48,720 crore on 31 August 2026.
CP and CDs
Issued in multiples of ₹5 lakh. Individuals may subscribe (up to 25% of a primary CP issue); mutual fund schemes also hold them.
Sources: RBI press releases of 12 Nov 2021 (Retail Direct) and 6 Aug 2025 (auto-bidding); RBI FAQs on G-secs; SEBI Master Circular, 20 Mar 2026; AMFI Monthly Note, August 2026.
Trainer notes
An Overnight Fund holds securities maturing in 1 day, a Liquid Fund debt and money market securities maturing in up to 91 days, and a Money Market Fund money market instruments maturing in up to 1 year. They are mutual fund schemes: NAV changes daily and returns are not assured. The debt fund categories deck covers them. ₹90,798 + ₹7,18,026 + ₹3,39,896 crore = ₹11,48,720 crore.
If you learnt this from older material
What older decks say
- Treasury bills come in 3, 6 and 9-month maturities.
- CDs run from one month to five years, in any denomination.
- Call money is lent for one to fifteen days.
- Call money is the most important part of the money market.
What holds now
- Treasury bills are issued for 91, 182 and 364 days.
- CDs run from 7 days to 1 year, in lots of ₹5 lakh (RBI Directions, 2021).
- Call is overnight. Notice money is 2 to 14 days; term money 15 days to 1 year.
- On 31 Aug 2026 tri-party repo was far larger: 71% of overnight volume; call about 2%.
Sources: RBI FAQs on the Government Securities Market; RBI Master Directions on CDs and Call, Notice and Term Money (2021); RBI Money Market Operations, 1 Sep 2026.
Trainer notes
Two more changes from the RBI toolkit deck belong here: the floor of the corridor is the SDF rate, not the reverse repo rate, since 8 April 2022, and TREPS replaced CBLO on 5 November 2018. The call market is small but still matters, because its weighted average rate is RBI's operating target.
Four things people get wrong
Misconception'The money market has no risk.'
What is trueTreasury bills carry the Government's promise. CP is unsecured, and a CD depends on the bank that issued it.
Misconception'Treasury bills pay interest.'
What is trueThey pay no coupon. The return is the gap between the discounted price paid and the face value repaid.
Misconception'Mutual funds lend in call money.'
What is trueRBI's Directions list only banks and primary dealers. Funds lend through tri-party repo and buy T-bills, CP and CDs.
Misconception'RBI sets the call rate.'
What is trueBorrowers and lenders set it each day. RBI sets the corridor and manages cash so that the rate stays near the repo rate.
Trainer notes
On the first point: short maturity keeps price swings small, but it does not remove credit risk, and a fund holding CP or CDs carries the risk of those issuers. The credit risk deck covers ratings; A3 is the lowest rating at which CP may be issued, not a typical one.
Check yourself
Question 1: A 182-day Treasury bill with a face value of ₹100 is bought for ₹97.00 (assumed). What is its yield, on the basis used in auction results?
Answer: Discount ₹3.00. ₹3.00 ÷ ₹97.00 = 3.0928% for 182 days. × 365 ÷ 182 = 6.20% a year.Question 2: Name the three unsecured markets open to banks and primary dealers, and the term of each.
Answer: Call money: overnight. Notice money: 2 to 14 days. Term money: 15 days to 1 year.Question 3: On 31 August 2026 call money was about 2% of overnight volume and tri-party repo about 71%. Why is the call rate still watched so closely?
Answer: Because the weighted average call rate is RBI's operating target. RBI manages the cash in the banking system so that this rate stays close to the policy repo rate, inside the corridor between the SDF and MSF rates.
Sources and disclaimer
Sources for the figures in this explainer
- Treasury bills: RBI FAQs 'Government Securities Market in India'; RBI Press Release 2026-2027/972, 27 Aug 2026 (auction result).
- Commercial paper: RBI Master Direction, 3 Jan 2024. Certificates of deposit: RBI Master Direction, 4 Jun 2021. Call, notice and term money: RBI Master Direction, 1 Apr 2021.
- Tri-party repo: The Clearing Corporation of India Ltd. (CCIL), Tri-party Repo page. Start date of 5 Nov 2018: CCIL notification CCIL/L&S/18/114, 29 Oct 2018.
- Volumes and rates on 31 Aug 2026: RBI Press Release 2026-2027/1008, Money Market Operations, 1 Sep 2026. Policy rates on that date: RBI Current Rates (page archived 2 Sep 2026).
- CDs and CP outstanding: RBI Bulletin, September 2026, Tables 28 and 29. Operating target and corridor: RBI Monetary Policy overview page. SDF as floor since 8 Apr 2022: RBI press release.
- Funds: SEBI Master Circular, 20 Mar 2026; AMFI Monthly Note, August 2026. RBI Retail Direct: RBI releases of 12 Nov 2021 and 6 Aug 2025. The T-bill example uses an assumed price.
This material is for training and investor education only. It is not investment, tax or legal advice and is not a recommendation to buy, sell or hold any security or scheme. Examples use assumed figures unless a source and date are shown. Mutual fund investments are subject to market risks; read all scheme related documents carefully. Trustner Asset Services Pvt. Ltd. is an AMFI-registered Mutual Fund Distributor (ARN-286886).