Cblo

Collateralized Borrowing and Lending Obligation (CBLO)
presentation. A collateralized borrowing and lending obligation (CBLO) is a money market instrument that represents an obligation between a borrower and a lender concerning the terms and conditions of a loan. CBLOs are operated by the Clearing Corporation of India Ltd. (CCIL) and the Reserve Bank of India (RBI).

1. Collateralized Borrowing and Lending Obligation C ollateralized borrowing and lending obligation (CBLO) is a money market instrument It represents an obligation between a borrower and a lender concerning the terms and conditions of a loan. CBLOs allow those restricted from using the interbank call money market in India to participate in the short-term money markets.

2. How a CBLO Works To access these funds, the institution must provide eligible  securities  as collateral—such as Treasury bills  that are at least six months from maturity . The CBLO works like bond the lender buys the CBLO and a borrower sells the money market instrument with  interest. The CBLO facilitates borrowing and lending for various maturities, from overnight to a maximum of one year, in a fully  collateralized  environment.

3. Requirements for a CBLO To borrow, members must open a Constituent SGL (CSGL) account with the CCIL, which is used to deposit the collateral. Types of financial institutions eligible for CBLO membership include insurance firms,  mutual funds  nationalized banks, private banks,  pension funds, and private dealers. Members willing to lend must submit their bids in the CBLO auction market The minimum lot size for the CBLO auction market is Rs.50 lakhs and the multiple lot size is Rs.5 lakhs

4. Key Takeaways CBLO is a money market instrument that represents an obligation between a borrower and a lender. These instruments are operated by the Clearing Corporation of India Ltd. (CCIL) and Reserve Bank of India (RBI), with CCIL members being institutions with little to no access to the interbank call money market in India. The instrument works like a bond where the lender buys the CBLO and a borrower sells the money market instrument with interest.