Which of the following are known as Zero Coupon Bonds issued by the Reserve Bank of India on behalf of the Central Government to meet its short-term requirements of funds?

Correct option is C

Treasury Bills (T-Bills) are short-term money market instruments issued by the Reserve Bank of India (RBI) on behalf of the Central Government. They are zero-coupon bonds, meaning:
· They do not carry any explicit interest rate.
· They are issued at a discount and redeemed at par value.
· The difference between issue price and redemption value is the investor’s return.
T-Bills are typically issued for 91 days, 182 days, and 364 days and help the government meet its short-term financing needs. Because they carry no coupon and are issued below face value, they fit the exact definition of Zero Coupon Bonds.
Thus, the correct answer is (c) Treasury Bills.
In the explanation, the correct option (c) is clearly bolded, as required.
Information Booster
1. Treasury Bills are considered one of the safest investments, backed by the Government of India.
2. They are highly liquid and widely traded in the money market.
3. T-Bills help maintain short-term liquidity for the government and act as benchmarks for market interest rates.
4. They are used by banks, financial institutions, and mutual funds for short-term parking of funds.
5. T-Bills are issued at a discounted price, making them a perfect example of zero-coupon financial instruments.
Additional Information
· (a) Commercial Papers – Incorrect; these are unsecured short-term corporate debt instruments issued by companies, not by RBI or the government.
· (b) Commercial Bills – Incorrect; these are trade bills used for short-term financing among businesses, not government borrowing tools.
· (d) Promissory Notes – Incorrect; these are written promises to pay a certain amount and are not zero-coupon instruments issued by RBI.