Collateralised borrowing and lending obligation (CBLO) is another money market instrument operated by the Clearing Corporation of India Ltd. (CCIL), for the benefit of the entities who have either no access to the inter bank call money market or have restricted access in terms of ceiling on call borrowing and lending transactions. CBLO is a discounted instrument available for the maturity period ranging from one day to ninety days (up to one year as per RBI guidelines).
Different types of CBLO
In order to enable the market participants to borrow and lend funds, CCIL provides the Dealing System through Indian Financial Network (INFINET), a closed user group to the Members of the Negotiated Dealing System (NDS) who maintain Current account with RBI and through Internet for other entities who do not maintain Current account with RBI.
CCIL becomes Central Counterparty to all CBLO trades and guarantees settlement of CBLO trades.
Membership to the CBLO segment is extended to entities who are RBI- NDS members, viz., Nationalized Banks, Private Banks, Foreign Banks, Co-operative Banks, Financial Institutions, Insurance Companies, Mutual Funds, Primary Dealers, etc. Associate Membership to CBLO segment is extended to entities who are not members of RBI- NDS, viz., Co-operative Banks, Mutual Funds, Insurance companies, NBFCs, Corporates, Provident/ Pension Funds, etc.
By participating in the CBLO market, CCIL members can borrow or lend funds against the collateral of eligible securities. Eligible securities are Central Government securities including Treasury Bills, and such other securities as specified by CCIL from time to time. Borrowers in CBLO have to deposit the required amount of eligible securities with the CCIL based on which CCIL fixes the borrowing limits. CCIL matches the borrowing and lending orders submitted by the members and notifies them. While the securities held as collateral are in custody of the CCIL, the beneficial interest of the lender on the securities is recognized through proper documentation.
CCIL becomes Central Counterparty to all CBLO trades and guarantees settlement of CBLO trades.
Membership to the CBLO segment is extended to entities who are RBI- NDS members, viz., Nationalized Banks, Private Banks, Foreign Banks, Co-operative Banks, Financial Institutions, Insurance Companies, Mutual Funds, Primary Dealers, etc. Associate Membership to CBLO segment is extended to entities who are not members of RBI- NDS, viz., Co-operative Banks, Mutual Funds, Insurance companies, NBFCs, Corporates, Provident/ Pension Funds, etc.
By participating in the CBLO market, CCIL members can borrow or lend funds against the collateral of eligible securities. Eligible securities are Central Government securities including Treasury Bills, and such other securities as specified by CCIL from time to time. Borrowers in CBLO have to deposit the required amount of eligible securities with the CCIL based on which CCIL fixes the borrowing limits. CCIL matches the borrowing and lending orders submitted by the members and notifies them. While the securities held as collateral are in custody of the CCIL, the beneficial interest of the lender on the securities is recognized through proper documentation.
CBLO Normal Market - It facilitates borrowing and lending by members on an online basis.
CBLO Auction Market - It facilitates borrowing and lending by members through submission of bids and offers.
CBLO features
Central Government Securities including Treasury Bills as specified by CCIL.
CBLO features
- This RBI approved Money Market instrument is backed by Gilts as collateral.
- It creates an obligation to repay the borrowed money along with interest on a fixed date. Also it provides a right to the lender to receive money lent with interest on a fixed future date.
- CBLO is tradable and CCIL acts counterparty to transaction.
- It is traded on screen that provides right amount of anonymity to a trade for counter parties.
Central Government Securities including Treasury Bills as specified by CCIL.
Thanks for sharing market instrument (CBLO). Investors should know about this instrument. Financial advisory company
ReplyDelete