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The cash management bill (CMB) is the most flexible instrument for a Central Bank because it can be issued when needed, allowing the Central Bank to have lower cash balances and issue fewer long-term notes. CMBs tend to pay higher yields than bills with fixed maturities, but their shorter maturities lead to lower overall interest expense.

The Government of India, in consultation with the RBI, had decided to issue a new short-term instrument, known as Cash Management Bills, to meet the temporary cash flow mismatches of the Government. CMBs in India are non-standard, discounted instruments issued for maturities less than 91 days. CMBs have the generic character of Treasury Bills.

Features of cash management bill (CMB) 

CMBs have the following features :- 

1. CMBs are in nature similar to Treasury Bills.
2. The tenure of CMBs is less than 91 Days, but the amount and date of issue depend upon the requirements.
3. It is issued at a discount on Face Value.
4. The announcement is made One day prior to the auction
5. The settlement of the auction is on T+1 Basis.
6. It is Tradable
7. Investment in them is eligible in Government securities by banks for SLR purpose



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