CBLO stands for ‘Collateralized Borrowing And Lending Obligation’ which is a money market instrument.
Important points to remember:
CBLO facilitates, borrowing and lending of funds, with collateral in place, to market participants who are admitted as members in CBLO Segment.
Similar to REPO or Call Money Market, CBLO is a short-term loan facility for the financial institution.
The members are required to open Constituent SGL (CSGL) Account with Clearing Corporation of India Limited (CCIL) for depositing securities as collateral.
The members could be 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.
CBLO is conceived and developed by the Clearing Corporation of India Ltd (CCIL) CBLO Dealing system, an anonymous order matching platform, 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 facilitates borrowing and lending for various tenors, from overnight up to a maximum of one year, in a fully collateralised environment.
CBLO is effective from January 20, 2003.
The borrowing banks classify CBLO as ‘Liability in India to Others’.