Fixed Deposits vs Treasury Bills: 5 Key Differences

FD or Treasury Bills? Here is a detailed information about the two and 5 key differences between Fixed Deposits and Treasury Bills to choose the right investment option.
FD vs Treasury Bills
3 mins
26 February 2024

Fixed Deposits vs Treasury Bills

Both fixed deposits and treasury bills are popular forms of investment that are considered to be profitable. Understanding the differences between treasury bills and fixed deposits can help you decide which one to choose to grow your wealth. To help you do this, here are five factors that distinguish the two from each other. Listed below are few differences between fixed deposits and treasury bills.

What is a Fixed Deposit?

One of the most popular investment alternatives in India is the fixed deposit, also known as an FD. In an FD, you deposit a lump quantity of money into your bank account for a set amount of time at set FD rates. You receive the money you initially invested plus compound interest at the end of the fixed deposit's term. Bajaj Finance offers higher interest rates of up to 8.85% p.a. An FD can be booked for a duration of between 12 and 60 months.
You can plan your fixed deposit using the FD calculator, which will help you determine the interest earned and maturity period for the tenure of your deposit.

Pro tip

Enjoy higher interest rate with Bajaj Finance Digital FD. Unlock returns of up to 8.85% p.a. by investing for 42 months via our website and app.

Types of fixed deposit

There are two types of fixed deposit offered by Bajaj Finance:

a. Cumulative fixed deposit: In a cumulative fixed deposit plan, the interest is accrued over the deposit's duration and paid at maturity. FD rates are often greater for longer deposits.

b. Non-cumulative fixed deposit: On the other hand, the interest payment is made on a monthly, quarterly, half yearly, or annual basis under a non-cumulative fixed deposit.

What is a treasury bill?

A money market instrument released by the Indian government is known as a Treasury Bill. It is issued as a future repayment promissory note. A treasury note is used to raise money to satisfy the government's short-term cash needs.

Types of treasury bill

Treasury bills have a maximum tenure of one year. Basis the maturity period, the treasury bills are classified into four types:

Maturity period

Auction frequency

Minimum investment

14 days

Every Wednesday

Rs. 1 lakh

91 days

Every week

Rs. 25,000

182 days

Every alternate week

Rs. 25,000

364 days

Every alternate week

Rs. 25,000

Key differences between Fixed Deposits & Treasury Bills

Both FD and treasury bills are profitable and low-risk investment choices for your portfolio. However, there are some differences between them. Here is a comparison of the two basis multiple parameters.

Profitability in terms of interest

Both fixed deposits and treasury bills can be rewarding investments. The interest gained by investing in a treasury bill is definitely higher than the interest offered by bank fixed deposits. The FD interest rates of most banks are up to 7% p.a. while the treasury bill rate for 2023 is up to 7.750% p.a. While this is high, a company fixed deposit offers an even higher rate of returns. Bajaj Finance Fixed Deposit offers interest rates up to 8.85% p.a.

Flexibility in withdrawing funds

Fixed deposits allow premature withdrawal of the funds that you have invested, but at a penalty charge. This also hampers your gains as you stand to lose interest when you withdraw your investment before maturity. When it comes to liquidating your investment in treasury bills, you can redeem them during government auctions held very frequently. They are issued to you at a discount and sold at face value; the difference is the interest you get. Treasury bills are issued for a short-term, as less as 91 days, and may be redeemed easily. Thus, allowing you more liquidity than FD, the shortest tenure for which is 12 months.

Risk-factor and credibility

As a government can never run out of funds, treasury bills are perceived as risk-free investments. A fixed deposit scheme does not depend upon the influence of market forces and bank FD are regarded as the safest. The Bajaj Finance Fixed Deposit has high stability ratings of CRISIL AAA/ STABLE and [ICRA]AAA(Stable), making it more reliable.

Tax benefits and service fees

Treasury bills are tax-exempt; however, you will be required to pay a bank fee for the services rendered. The interest gained by fixed deposits is taxable annually when it exceeds Rs. 10,000 (for individuals) and Rs. 50,000 for senior citizens. So, when you need to make a choice between a fixed deposit and treasury bills, consider factors like interest, security, and tax benefits and go with the option that best suits your financial needs.

A treasury bill is a good short-term investment option, however if you are looking for profitable returns for a longer duration, investing in Bajaj Finance FD is a good option. You can now start investing with just Rs. 15,000 and earn returns up to 8.85% p.a.

Frequently asked questions

What is the Digital FD offered by Bajaj Finance?

Bajaj Finance has launched a new FD variant called "Bajaj Finance Digital FD" for a period of 42 months. Bajaj Finance is providing one of the highest interest rates of up to 8.85% p.a. for senior citizens and for the customers below the age of 60 they are providing up to 8.60% p.a. The Digital FD can be opened and managed only through the Bajaj Finserv website or app.

What are factors to Consider When Choosing Between Treasury Bills and FDs?

Consider factors like risk tolerance, investment goals, liquidity needs, and interest rate outlook when choosing between Treasury Bills and FDs.

Are treasury bills riskier than fixed deposits?

Generally, Treasury Bills are considered lower-risk compared to fixed deposits due to government backing. However, FDs provide fixed returns, while T-bill returns depend on market rates.

Treasury bills vs fixed deposits: Which option gives higher returns?

The returns on Treasury Bills and FDs vary. T-bills may offer higher returns in some scenarios, but FDs provide fixed, guaranteed returns.

Can you invest in both treasury bills and FDs at the same time?

Yes, investors can diversify their portfolio by investing in both Treasury Bills and FDs simultaneously, balancing risk and returns.

Who regulates the prices of treasury bills?

The Reserve Bank of India (RBI) regulates the prices of treasury bills in India.

Show More Show Less


As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.