SAFEST INVESTMENT: TREASURY BILLS, HOW TO INVEST

August 23, 2025 Muhammad Mobasher Ali

Safest-Investment-Oppotunities:-T-Bills (treasury Bills) are short-term debt instruments issued by the Government of Pakistan to meet its financial needs. T-Bills are considered one of the safest investment avenues in the country because they are backed by the government. For investors who are seeking security, liquidity, and reasonable returns, T-Bills are a reliable choice.

What Are T-Bills?

T-Bills are government securities issued at a discount and redeemed at face value upon maturity. The difference between the purchase price and the redemption value constitutes the investor’s profit. They are available in maturities of 3 months, 6 months, and 12 months.

Mechanism of T-Bills:

Government, in case of need of funds, to finance the projects or to meet the Budget Deficit, requires to raise funds and one of the procedure adopted is T-Bills auction, 1. in Primary Market, 2. in Secondary Market.

Primary Market: It is direct participation in Auction by SBP (State Bank of Pakistan)
Seconday Market: It is, by opening a IPS account through your, banking channels,

Why to Invest in T-Bills?

Safe Investment – Backed by the Government of Pakistan, minimizing default risk. As Government Owned Securities
Short-Term Maturity – Suitable for investors who want quick liquidity.
Fixed Returns – Returns are determined upfront. Nothing is hidden, you will get return that already known,
Tradable in the Secondary Market: T-Bills can be sold at any time if investor needs money,
Diversification – A low-risk addition to an investment portfolio.

How to Invest in T-Bills in Pakistan

There are two main ways to invest in T-Bills:

1. Direct Investment via State Bank Auctions

The State Bank of Pakistan (SBP) conducts fortnightly auctions of T-Bills.
Institutional investors and individuals with significant capital can participate.
Investors must open an account with Primary Dealers (usually commercial banks).

2. Indirect Investment via Banks or Brokers

Individual investors typically invest through commercial banks or licensed brokers.
The bank facilitates the purchase on behalf of the investor.
This method is more convenient for small investors.

Steps to Invest in T-Bills (Through a Bank)

Open an Account with a commercial bank or broker that participates in T-Bill auctions.
Provide Instructions about the investment amount and desired maturity (3, 6, or 12 months).
Bank Submits Bid in the SBP auction on your behalf.
Allocation – Getting Successful, T-Bills Purchased
Maturity – At maturity, you receive the face value .

For complete Guide visit our article (Investing in T-Bills – Through Banking Channel)

Example

An investor buys a 6-month T-Bill worth PKR 1,000,000 at a discounted price of PKR 950,000.
At maturity, the government pays PKR 1,000,000.
Profit earned = PKR 50,000.

A more simple example for better understanding, A brand is selling a product at Rs. 7000/- on routine but later on they mark sale on the product i.e. upto 40 %, now you can buy the product at 4200/- only, a gain of Rs. 2800/-. this is what you already know about the gain/profit/discount rate.

Who Should Invest in T-Bills?

Conservative investors seeking security.
Corporate entities looking for short-term parking of funds.
Portfolio managers aiming for diversification.
Retirees who want stable and low-risk returns.

Risks Involved

Safest-Investment-Oppotunities:-T-Bills are one of the safest instruments, they still carry:

Inflation Risk – Returns may not keep up with rising inflation.
Opportunity Cost – Lower returns compared to riskier investments.

Praticipating in SBP Auctions:

To participate in the State Bank of Pakistan (SBP) auction of T-Bills, investors must go through authorized Primary Dealers, which are usually commercial banks and financial institutions licensed by SBP. The process involves opening an investment account with a Primary Dealer, submitting a bid (either competitive, where you specify the yield you want, or non-competitive, where you accept the cut-off yield decided by SBP), and transferring the investment amount before the auction date. SBP conducts these auctions fortnightly, and successful bidders receive T-Bills electronically in their investment account. At maturity, you will received the face value back to account.

Buying T-Bills through Commercial Banks:

Buying T-Bills through commercial banks is the most convenient method for individual investors in Pakistan. Most large banks act as Primary Dealers authorized by the State Bank of Pakistan (SBP) to participate in government securities auctions. To invest, you first need to maintain an account with the bank and request access to their investment services. The bank will guide you on available maturities (3, 6, or 12 months) and the minimum investment amount, which typically starts at PKR 5,000.

Investors can choose between a competitive bid (specifying the yield they want) or a non-competitive bid (accepting the cut-off yield announced by SBP). This indirect route saves time and makes T-Bill investment accessible to small and medium investors without requiring direct participation in auctions. Simply saying, Visit your bank’s manager with whom you have your account, e.g. NBP, for opening an IPS account first, with your CNIC, Next of Kin CNIC, and your bank Account Number, they will take with their Treasury Offices for opening of IPS account, once the account was opened you will receive intimation through your email provided and here you go for investment in T-Bills,

Purchase and Sale Offer

Once your IPS opened, ask your Bank Manager for the Purchase Qoute, they will send you the details of T-Bills at discount rate mentioning Present Value and FaceValue there in it, after 3 months (maturity) or any point of time for need, you need to again visit bank manager cabin for sale qoute, this reduce your personal intervene in investing.

Conclusion

Safest-Investment-Oppotunities:-T-Bills in Pakistan is an excellent option for individuals and institutions who prioritize safety, stability, and liquidity. Whether you invest directly via auctions or indirectly through banks, T-Bills provide a dependable way to earn fixed returns while protecting capital. For conservative investors, T-Bills remain a cornerstone of a balanced investment strategy.

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