{"id":2429,"date":"2025-05-01T20:10:43","date_gmt":"2025-05-01T14:40:43","guid":{"rendered":"https:\/\/lotusarise.com\/qna\/?p=2429"},"modified":"2025-05-01T20:10:45","modified_gmt":"2025-05-01T14:40:45","slug":"q-with-reference-to-the-indian-economy-collateral-borrowing-and-lending-obligations-are-the-instruments-of","status":"publish","type":"post","link":"https:\/\/lotusarise.com\/qna\/upsc\/q-with-reference-to-the-indian-economy-collateral-borrowing-and-lending-obligations-are-the-instruments-of","title":{"rendered":"Q. With reference to the Indian economy, \u201cCollateral Borrowing and Lending Obligations\u201d are the instruments of :"},"content":{"rendered":"\n<ul class=\"wp-block-list mcq\">\n<li>Bond market<\/li>\n\n\n\n<li>Forex market<\/li>\n\n\n\n<li><strong>Money market<\/strong><\/li>\n\n\n\n<li>Stock market<\/li>\n<\/ul>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Answer: (c) Money market<\/strong><\/p>\n<\/blockquote>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"collateral-borrowing-and-lending-obligations-cblos\">Collateral Borrowing and Lending Obligations (CBLOs)<\/h5>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Collateral Borrowing and Lending Obligations (CBLOs) are\u00a0<strong>money market instruments in India used for short-term borrowing and lending against collateral,<\/strong>\u00a0typically government securities.<\/li>\n\n\n\n<li>They provide a way for financial institutions\u00a0<strong>to manage liquidity and short-term funding needs, particularly for those not part of the interbank call money market<\/strong>.<\/li>\n\n\n\n<li>A CBLO is much like a Treasury bill or very short term market instrument; the primary difference is a\u00a0<strong>CBLO entails collateral in the transaction<\/strong>.<\/li>\n\n\n\n<li>CBLOs are offered in electronic book entry form with\u00a0<strong>maturity periods ranging from 1 to 19 days<\/strong>, and can be traded in both a continuous market and an auction market.<\/li>\n\n\n\n<li>The\u00a0<strong>Clearing Corporation of India Ltd. (CCIL) launched CBLOs in 2003<\/strong>\u00a0to address shortcomings in the money market.<\/li>\n\n\n\n<li>CBLOs are essentially an obligation for the borrower to repay borrowed funds at a specified future date, along with an authority for the lender to receive the money on that date, which can be transferred.<\/li>\n\n\n\n<li><strong>CBLOs are traded in the market, and can be transferred to another person.<\/strong>\u00a0CBLOs are often\u00a0<strong>tradable in the secondary market<\/strong>, which adds to their liquidity. Investors who hold CBLOs can buy or sell them before their maturity date, allowing them to manage their investments more effectively based on changing market conditions.<\/li>\n\n\n\n<li>The CCIL guarantees the repayment of loans, and all borrowings are fully collateralized.<\/li>\n\n\n\n<li>CBLOs are\u00a0<strong>primarily designed for institutional participants<\/strong>, and individual investors typically do not directly participate in CBLO transactions. They are more commonly\u00a0<strong>used by financial institutions and organizations<\/strong>\u00a0to manage their short-term funding and investment needs.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/lotusarise.com\/wp-content\/uploads\/2025\/04\/money-market-instruments-1024x480.jpg\" alt=\"money market instruments\" class=\"wp-image-51796\" style=\"width:752px;height:auto\" title=\"UPSC Prelims Research: Indian Economy 2024 4\"\/><\/figure>\n<\/div>\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Bond market:<\/strong>\u00a0The bond market involves the\u00a0<strong>issuance and trading of debt securities, typically long-term instruments such as government bonds, corporate bonds, and municipal bonds<\/strong>.\n<ul class=\"wp-block-list\">\n<li>While bonds can be used as collateral in CBLO transactions, CBLO itself is a money market instrument rather than a bond market instrument.<\/li>\n\n\n\n<li>The bond market deals with instruments that have a longer maturity compared to the short-term nature of money market instruments like CBLO.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Forex market<\/strong>: The\u00a0<strong>forex (foreign exchange) market is the global marketplace for trading national currencies against one another.<\/strong>\n<ul class=\"wp-block-list\">\n<li>It deals with currency pairs and exchange rates and involves the buying and selling of currencies.<\/li>\n\n\n\n<li>CBLO does not pertain to the exchange of foreign currencies or the management of exchange rates, making it unrelated to the forex market.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Stock market:<\/strong>\u00a0The stock market is where\u00a0<strong>shares of publicly held companies are issued, bought, and sold.<\/strong>\n<ul class=\"wp-block-list\">\n<li>It deals with equity instruments and involves the trading of company stocks.<\/li>\n\n\n\n<li>CBLO does not involve equity trading or stock market transactions; instead, it is focused on short-term borrowing and lending within the money market.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Answer: (c) Money market Collateral Borrowing and Lending Obligations (CBLOs)<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[1,3],"tags":[38],"years":[49],"class_list":["post-2429","post","type-post","status-publish","format-standard","hentry","category-upsc","category-prelims","tag-indian-economy","years-49"],"acf":[],"taxonomy_info":{"category":[{"value":1,"label":"UPSC"},{"value":3,"label":"Prelims"}],"post_tag":[{"value":38,"label":"Indian Economy"}],"years":[{"value":49,"label":"2024"}]},"featured_image_src_large":false,"author_info":{"display_name":"LotusArise","author_link":"https:\/\/lotusarise.com\/qna\/author\/team-lotusarise"},"comment_info":0,"category_info":[{"term_id":1,"name":"UPSC","slug":"upsc","term_group":0,"term_taxonomy_id":1,"taxonomy":"category","description":"","parent":0,"count":1269,"filter":"raw","cat_ID":1,"category_count":1269,"category_description":"","cat_name":"UPSC","category_nicename":"upsc","category_parent":0},{"term_id":3,"name":"Prelims","slug":"prelims","term_group":0,"term_taxonomy_id":3,"taxonomy":"category","description":"","parent":1,"count":1251,"filter":"raw","cat_ID":3,"category_count":1251,"category_description":"","cat_name":"Prelims","category_nicename":"prelims","category_parent":1}],"tag_info":[{"term_id":38,"name":"Indian Economy","slug":"indian-economy","term_group":0,"term_taxonomy_id":38,"taxonomy":"post_tag","description":"","parent":0,"count":225,"filter":"raw"}],"_links":{"self":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/2429","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/comments?post=2429"}],"version-history":[{"count":0,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/2429\/revisions"}],"wp:attachment":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/media?parent=2429"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/categories?post=2429"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/tags?post=2429"},{"taxonomy":"years","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/years?post=2429"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}