Treasury Bills Guide

Everything you need to know about investing in Kenyan Treasury Bills

What are Treasury Bills?

Treasury Bills (T-Bills) are short-term government securities issued by the Central Bank of Kenya on behalf of the Government of Kenya. They are a form of debt instrument where you essentially lend money to the government for a short period, and in return, you receive interest on your investment.

T-Bills are considered one of the safest investment options in Kenya because they are backed by the full faith and credit of the Kenyan government.

Key Features of Treasury Bills

Short-Term Investment

Available in 91-day (3 months), 182-day (6 months), and 364-day (1 year) tenures

Minimum Investment

Start with as little as KES 100,000

Government Backed

Backed by the Government of Kenya, making them very low risk

Competitive Returns

Historically offer higher returns than savings accounts

How Treasury Bills Work

Treasury Bills are sold at a discount to their face value (par value). This means you buy them for less than their nominal value, and when they mature, you receive the full face value. The difference between the purchase price and the face value is your return (interest).

Example:

91-Day Treasury Bill

  • Face Value: KES 100,000
  • Purchase Price (at 10% annual rate): ~KES 97,500
  • Interest Earned: KES 2,500
  • Return at Maturity: KES 100,000
  • Holding Period: 91 days (3 months)
How to Buy Treasury Bills

Method 1: Through CBK Directly

  1. Open a CDS (Central Depository System) account with CBK
  2. Get a KRA PIN certificate
  3. Submit bid through CBK online platform or authorized bank
  4. Transfer funds to your CDS account
  5. Receive interest and principal at maturity

Method 2: Through Commercial Banks

  1. Approach your bank (most commercial banks offer this service)
  2. Fill out application forms
  3. Provide your KRA PIN and identification
  4. Fund your account with the investment amount
  5. Bank handles the bidding process on your behalf

Method 3: Mobile Banking

Some banks now offer Treasury Bill investments through mobile banking apps, making it even easier to invest on the go.

Tax Information

Interest earned from Treasury Bills is subject to a 15% withholding tax. This tax is automatically deducted at source before you receive your returns. For example, if you earn KES 2,500 in interest, KES 375 (15%) will be deducted as tax, and you'll receive KES 2,125.

Advantages
  • Very low risk (government-backed)
  • Higher returns than savings accounts
  • Liquid - can be traded in secondary market
  • Predictable returns
  • Short investment period
Disadvantages
  • ×Relatively low returns compared to equities
  • ×Subject to 15% withholding tax
  • ×Money locked in until maturity (unless sold in secondary market)
  • ×Returns may not beat inflation in some periods
  • ×Minimum investment of KES 100,000 required

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