Are T-bills a better choice to invest in than FDs?

[Meera]

FDs provide 6–7% annual interest rates, and T-bills currently offer 6.9% for 364-day tenors. i know T-bills are government-backed, so are they a better choice for temporary investments than FDs?

[Siddarth]

The Indian government backs T-bills, making them a safe investment for short-term parking. Currently, T-bills offer 6.9% returns, and FD offers 6–7% only. While FD interest is fully taxable, T-bills offer discounted returns.

[Meera]

I understand that T-bills are backed by the government and currently offer slightly higher returns than fixed deposits (FDs). However, do their shorter terms and lack of regular interest payments make them less suitable for investors who want steady income?

[Siddarth]

@Meera You’re correct — T-bills offer slightly higher returns and are very safe, but their short-term nature and absence of periodic interest make them less ideal for investors seeking steady income. They’re better suited for parking funds temporarily or for risk-averse investors focused on capital preservation.

[DosaDynamo]

But @Siddarth tell me, don't their absolute liquidity and lack of market price volatility make them superior to longer-term bonds for income investors who might need to access capital quickly without incurring losses?