Introduction:
“Collateralized Borrowing and Lending Obligation (CBLO)", as the name implies is a fully collateralized and secured instrument for borrowing / lending money. CBLO as a product is conceived and developed by CCIL for the facilitating deployment in a collateralized environment. As a product, CBLO aims to benefit those entities who have been phased out of Call/ Notice money market and / or those entities on restrictions have been placed on the borrowing / lending in call / notice money market. CBLO Dealing system is hosted and maintained by Clearcorp Dealing Systems (India) Ltd, a fully owned subsidiary of CCIL. CCIL becomes Central Counterparty to all CBLO trades and guarantees settlement of CBLO trades. CBLO is an RBI approved money market instrument which can be issued for a maximum tenor of one year. CBLO is a discounted instrument traded on Yield Time priority. CBLO instrument that are generally made available for trading are those with maturity of next seven business days and three month end dates. The balances are maintained in electronic book entry. The access to CBLO Dealing system for NDS Members is made available through INFINET and for non NDS Members through Internet. The Funds settlement of members in CBLO segment is achieved in the books of RBI for members who maintain an RBI Current Account and are allowed to operate that current account for settlement of their secondary market transactions. In respect of other members, CBLO Funds settlement is achieved in the books of Settlement Bank.
What is CBLO?
CBLO:
• Is an RBI approved Money Market instrument;
• Is an instrument backed by Gilts as Collaterals;
• Creates an Obligation on the borrower to repay the money borrowed along with interest on a predetermined future date;
• A Right and Authority to the lender to receive money lent along with interest on a predetermined future date;
• Creates a charge on the Collaterals deposited by the Borrower with CCIL for the purpose;
Membership:
Membership to CBLO segment is generally extended to Repo eligible entities as per RBI guidelines. CBLO Membership is granted to NDS Members and non NDS Members. The entity type eligible for CBLO Membership are Nationalized Banks, Private Banks, Foreign Banks, Co-operative Banks, Financial Institutions, Insurance Companies, Mutual Funds, Primary Dealers, Bank cum Primary Dealers, NBFC, Corporate, Provident/ Pension Funds etc. Entities who have been granted CBLO Membership are classified based on their NDS Membership. CBLO Members who are also NDS Members are CBLO (NDS) Members and other CBLO Members are CBLO (Non NDS) Members or Associate Members.
Eligible Securities:
Eligible securities are Central Government securities including Treasury Bills as specified by CCIL from time to time.