With reference to the Indian economy, "Collateral Borrowing and Lendin

With reference to the Indian economy, “Collateral Borrowing and Lending Obligations” are the instruments of :

Bond market

Forex market

Money market

Stock market

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This question was previously asked in

UPSC IAS – 2024

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Collateral Borrowing and Lending Obligations (CBLO) were money market instruments introduced by the Clearing Corporation of India Ltd (CCIL) in 2003. CBLO represented an obligation by a borrower to return the borrowed funds at a specified future date and an obligation by a lender to return equivalent securities deposited as collateral by the borrower. It allowed market participants (like banks, financial institutions, mutual funds) to borrow and lend funds for short durations (typically overnight) against eligible securities held in electronic form. This function places CBLO firmly within the domain of the money market, which deals with short-term debt instruments.

CBLO was a short-term borrowing and lending instrument used in the Indian financial market with eligible securities as collateral.

CBLO was a significant instrument in the Indian money market for cash management and meeting reserve requirements until it was discontinued and replaced by the Tri-Party Repo (TREPS) system facilitated by CCIL in 2018-2019. TREPS serves a similar function as CBLO but with an added third party (CCIL or another clearing house) guaranteeing the settlement.

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