Treasury Bills (T-Bills) in Pakistan: What They Are and How to Invest

Introduction — The Investment That Even the Big Banks Use

Here is something interesting: when you put money in a savings account or a money market mutual fund in Pakistan, a large chunk of that money gets invested in Treasury Bills. Banks, insurance companies, and mutual funds all park their short-term cash in T-bills.

So in a way, you are already indirectly investing in T-bills. The question is: can you invest in them directly, and should you?

This article explains everything you need to know about Pakistan Treasury Bills — what they are, how they work, the current rates, and the different ways ordinary Pakistanis can access them.

What Are Treasury Bills (T-Bills)?

A Treasury Bill is a short-term debt instrument issued by the Government of Pakistan through the State Bank of Pakistan (SBP). When the government needs to borrow money for a short period — to manage cash flow, pay expenses, or fund projects — it issues T-bills.

In simple terms: you lend money to the government, the government pays you back after a fixed period with a profit, and since it is the government of Pakistan guaranteeing repayment, the risk is as low as it gets in Pakistani investments.

T-bills are different from regular bonds because they are short-term — typically 3 months (91 days), 6 months (182 days), or 1 year (364 days).

How Do T-Bills Work? A Simple Example

T-bills are issued at a ‘discount’ — meaning you pay less than the face value, and receive the full face value at maturity. The difference is your profit.

📊 Simple T-Bill Example Face Value: Rs. 100,000Discount (profit rate ~20% annualised for 91-day T-bill): Rs. ~5,000You Pay Today: Rs. 95,000You Receive After 91 Days: Rs. 100,000Your Profit: Rs. 5,000 in 3 months (roughly 20% annualised) Note: Actual rates change with every SBP auction. Check sbp.org.pk for current cutoff rates.

Current T-Bill Rates in Pakistan (2024)

T-bill rates in Pakistan move closely with the SBP policy rate. When SBP raises the policy rate, T-bill yields go up. When it cuts rates, yields fall.

In 2024, as Pakistan went through a period of high interest rates (SBP policy rate reached 22%), 3-month T-bill cutoff rates also reached historically high levels — making them very attractive compared to bank fixed deposits.

As rates normalise, T-bill yields will come down. This is why timing matters when locking into T-bills.

📈 Approximate T-Bill Rates (2024 — Subject to Change) 3-Month (91-day) T-Bill: ~18-22% annualised6-Month (182-day) T-Bill: ~19-23% annualised12-Month (364-day) T-Bill: ~19-22% annualised ✅ Always check latest auction results at: sbp.org.pk → Monetary Policy → T-Bill Auctions

Who Can Invest in T-Bills in Pakistan?

Historically, T-bills were only available to large institutional investors — banks, insurance companies, and corporations. The minimum investment was Rs. 100,000 and the process required going through a Primary Dealer (usually a bank or investment house).

The good news is that individual retail investors can now access T-bills through several channels, which we cover below.

T-Bill (US)	NSC (India)	Bank FD	Money market fund
Issuer	U.S. Treasury	Govt. of India (Post Office)	Commercial bank	Asset management company
Typical return	4–5.5% p.a. Competitive	7.7% p.a. High	5–8% p.a. Varies by bank	4–5% p.a. Variable
Term / tenure	4, 8, 13, 26, 52 weeks	5 years (fixed)	7 days – 10 years	Open-ended (daily liquidity)
Liquidity	Very high Sell anytime on secondary market	Low Lock-in; premature exit penalised	Medium Break with penalty	Very high Redeem any business day
Credit risk	Near zero Sovereign-backed	Near zero Sovereign-backed	Low Insured up to limit (FDIC/DICGC)	Low–medium NAV can theoretically break $1
How interest works	Bought at discount; face value paid at maturity	Compounded annually; paid at maturity	Periodic interest or cumulative	Daily accrual; reflected in NAV or payout
Tax treatment	Federal tax only — exempt from state & local	TDS deducted; qualifies for 80C deduction	Fully taxable; TDS above threshold	Capital gains tax on redemption; varies by holding
Minimum investment	$100	₹1,000	Varies (often ₹1,000 / $500)	Often ₹500 / $1 (via fund)
Best suited for	Parking USD cash safely short-term	Indian savers wanting guaranteed returns + tax break	Those wanting fixed predictable return	Ultra-short-term cash management

How to Invest in T-Bills — 3 Ways for Regular Pakistanis

Option 1 — Through a Money Market Mutual Fund (Recommended for Beginners)

This is the easiest and most accessible route. Money market mutual funds in Pakistan invest the majority of their assets in short-term government securities — primarily T-bills.

When you invest in a fund like Meezan Cash Fund, UBL Liquidity Plus, or HBL Money Market Fund, your money is being deployed into T-bills and similar instruments by professional fund managers.

Benefits: Low minimum (Rs. 500-1,000), daily liquidity, no direct auction participation needed, returns closely track T-bill rates.

Option 2 — Direct Investment via Your Bank

Several Pakistani banks allow their account holders to invest in T-bills directly. You contact your relationship manager or visit the investments desk and place an order to participate in the SBP’s weekly T-bill auction.

Minimum investment for direct T-bills is typically Rs. 100,000. Your bank handles the auction participation on your behalf, and you receive the profit either periodically or at maturity (depending on the instrument).

Note: This option is best for people with Rs. 1 lakh or more to invest and who want slightly higher returns than money market funds (since no fund management fee applies).

Option 3 — Roshan Digital Account (For Overseas Pakistanis)

Non-Resident Pakistanis (NRPs) can invest in Naya Pakistan Certificates (which are backed by T-bills and PIBs) through the Roshan Digital Account. This is offered by SBP through most major Pakistani banks and can be opened entirely online from abroad.

T-Bills vs National Savings Certificates — Which Is Better?

⚖️ T-Bills vs NSC Comparison Minimum Investment: T-Bills Rs. 100,000 | NSC Rs. 500–50,000Access: T-Bills via banks/mutual funds | NSC via NS offices/banks/onlineLiquidity: T-Bills mature in 3-12 months | NSC terms are 3-10 yearsReturn Type: T-Bill = discount at maturity | NSC = monthly/semi-annual paymentsTax: Both subject to withholding tax; filer rates lowerSafety: Both 100% government backedBest For: T-Bills = short-term parking | NSC = medium-long term income

What Happens at Maturity?

When your T-bill matures, the full face value is automatically credited to your bank account. If you invested Rs. 95,000 in a 91-day T-bill with face value of Rs. 100,000, you receive Rs. 100,000 after 91 days. Your profit is the Rs. 5,000 difference.

If you want to reinvest, you simply participate in the next auction. Many banks and mutual funds roll over T-bill investments automatically.

Tax on T-Bill Returns

Withholding tax is deducted by the bank at source before your profit is paid. For tax filers, the rate is lower than for non-filers. The exact rates change with annual budget announcements, so verify the current applicable rate with your bank or FBR’s website.

Since T-bill income is essentially ‘profit on a government loan,’ it is classified as income and taxed accordingly under Pakistani tax law.

Should You Invest in T-Bills?

T-bills are an excellent option if:

• You have a lump sum (Rs. 1 lakh or more) that you do not need for 3-12 months
• You want government-backed, zero-credit-risk returns
• You want better returns than a bank savings account without equity market risk
• You are building a conservative, capital-preservation portfolio

T-bills are NOT ideal if:

• You need access to your money immediately — wait for maturity
• You are looking for long-term wealth growth — equity mutual funds will outperform over 5+ years
• Your amount is under Rs. 1 lakh — use a money market mutual fund instead