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The following accounting entries are suggested by M/s
C.C.Chokshi & Co., Chartered Accountants, in respect of transactions in
CBLO's.
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Entries in the Books of Borrower
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Initial Borrowing:
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Bank A/c Dr. (at discounted price raised)
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To CBLO
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On Redemption:
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CBLO A/c Dr. (Initial Price)
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Discount on CBLO A/c Dr. (Discount paid)
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To Bank (at full redemption value)
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Entries in the Books of Lender
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Initial Lending:
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CBLO A/c Dr. (at discounted price)
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To Bank
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On Redemption:
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Bank A/c Dr. (at full redemption value)
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To CBLO (Issue Price)
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To Discount on CBLO (Discount earned)
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On realization before redemption by transfer to another member
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Bank A/c Dr. (Realisation Price)
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To CBLO
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To Discount (earned) on CBLO
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Both gain or loss would be reflected in the same account, viz
discount on CBLO (debit for loss and credit for gain).
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In case of sale of CBLO followed by a subsequent purchase
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The transaction would be recorded accordingly and the
differentials in the hands of the member would constitute gain or loss as the
case may be, as reflected in the Discount on CBLO Account.
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In the Balance Sheet of the member (As suggested by RBI in its letter dated
March 22nd, 2005)
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Collateralised
Borrowing and Lending Obligation(CBLO) - Classification in the Banks Balance
Sheet
1.CBLO Borrowing :
Schedule 4 -Item I (iii) i.e., Borrowings in India -
Other Institutions and Agencies.
2. CBLO Lending :
a) If repayable within 15 days:
Schedule 7 -
Item I (ii) (b) i.e., Balances with Banks and Money at Call & Short
Notice - Money at Call &
Short Notice - with other institutions
b) If repayable beyond 15 days:
Schedule 9
- Advances
Part A - Item (ii) i.e., Cash Credits, Overdrafts and loans repayable on
demand and
Part B - Item (i) i.e., Secured by Tangible Assets and
Part C - Item I (iv) - i.e., Advances in India - Others
3. Cash Margin Deposit with CCIL :
Schedule 11 - Item (vi) i.e., Other Assets - Others
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