Cash Management Bills

Indian Economy glossary

Also called: CMB · Topic: Financial Markets, Instruments, Insurance and Pensions · NCERT: Beyond NCERT

Meaning

Cash Management Bills (CMBs) are very short-term Treasury bills that run for less than 91 days. The Centre issues them to fill temporary gaps when its spending comes before its receipts, such as tax collections. Like other T-bills, they are issued at a discount (below face value) and repaid at face value, and they pay no coupon (periodic interest). They have been used since 2009.

Example

Say the Centre has large payments due this month but a big instalment of tax receipts arrives only a few weeks later. It can issue CMBs through RBI to cover the gap for those few weeks, instead of borrowing for a full 91 days or more.

Don't confuse with

  • Regular T-bills: these come in fixed tenors of 91, 182 and 364 days and are part of the normal borrowing calendar. CMBs run for less than 91 days and are issued only when a temporary cash gap arises.

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