With reference to the Indian economy, “Collateral Borrowing and Lending Obligations” are the instruments of :
- Bond market
- Forex market
- Money market
- Stock market
Show answer and solution
Correct answer: C. Money market
Answer: C. Collateralized Borrowing and Lending Obligation (CBLO) is a MONEY MARKET instrument.
CBLO is a money-market product introduced by Clearing Corporation of India Ltd (CCIL) in 2003 for short-term funds.
It allows borrowing and lending against eligible collateral (mainly G-Secs) with maturities ranging from one day to one year.
Discontinued in 2018 and replaced by the Tri-party Repo (TREPS).
CBLO/TREPS are short-tenor instruments serving banks, mutual funds, insurance companies and other institutions for liquidity management.
The money market deals with such short-term debt instruments (typically less than one year), as opposed to bond market (long-term debt), forex (currency), or stock market (equities).
Source: RBI Money Market documentation / CCIL website.