Collateralized Borrowing and Lending Obligation
Indian Money Market
 Call/ Notice/ Term Money
 Repo
 Commercial Paper
 Certificate of Deposit
 Treasury Bills
Why Money Markets?
 Fixed Income Market (over 1 year)
 For borrowing long term
 For investing long term
 For meeting reserve requirements (eg: SLR)
 For trading interest rates along the yield curve
• Money Market (under 1 year)
 For borrowing/ lending short term funds
 Bridging liquidity mismatches(mostly intra-day)
 For meeting reserve requirements (CRR & SLR)
Indian Money Market
 T-Bill, CP, CD
 Used by Govt., Corporates, Banks, FIs for short term borrowing
 Call Money, Repo, CBLO
 Used by Banks, MFs, FIs, Corporates to manage short term liquidity
 Predominantly over night money market
 Over 90% of activity in Call, Repo & CBLO in overnight segment
Overnight Money Market
 Call/ Notice/ Term Money
 Uncollateralized market
 Participants: Banks & Primary Dealers only
 Repo
- Collateralized market
- Participants: Banks, Primary Dealers, FIs, MFs, Corporates, insurance
companies, NBFCs
 Collateralized market
 Participants: Banks, Primary Dealers, FIs, MFs, Corporates, insurance
companies, NBFCs
Call/ Notice/ Term Money Market
• Uncollateralized market
 Typically overnight market
 Historically, most depended market for short term funds
 Earlier consisted of both banks and non-bank entities
(eg: MFs, Corporates etc.)
Historically, very volatile market
Most expensive due to uncollateralized nature
Highest counterparty risk in money market
Gradual phasing out of non-bank entities
• Now, participants: Banks & Primary Dealers only
 100% collateralized dealing
 Typically overnight market
 More stable market less expensive than Call money
 Collateral fussiness
 Problems in collateral management
 No early close out of position
 No substitution of collateral
What is CBLO ?
 CBLO was conceived and developed by CCIL for facilitating deployment in a collateralized
 It is a tripartite Repo transaction involving CCIL as third party and as central counterparty to
borrower and lender
 CBLO is an RBI approved money market instrument which can be issued for a maximum tenor
of one year.
• 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 or has the privilege to transfer the authority to anther person
• Creates a charge on the Collaterals deposited by the Borrower with CCIL for the purpose.
 to address the concerns of entities phased out of call money market or are
subjected to borrowing/ lending restrictions
 MFs, NBFCs, FIs, Corporates, Insurance Comp, Coop-Banks
 to address the tenor ‘lock-in’ issues related to Repo
 Buying/Selling CBLOs
 to bring in better transparency
 real time dissemination of quotes and dealt rates and market depth
 to bring in better level playing field
 access to wider member base, anonymity, guaranteed settlement
 to have better price discovery in money market
 pricing a function of demand & supply
How does CBLO operate?
 A member deposits a set of eligible securities as collateral with CCIL
 Borrowing limit: based on mark-to-market value and hair-cut applicable
on securities deposited
 Based on borrowing limit, CBLOs are issued to a member.
 CBLO is an instrument that can be bought and sold.
 Borrowing/ Lending is done by selling/ buying CBLOs
 A borrower sells CBLOs to raise funds; a lender buys CBLOs to deploy
How does CBLO operate?
 Trading in CBLOs is facilitated on a dealing system called CBLO
 CBLO dealing system is:
 an electronic dealing system
 for collateralized borrowing/ lending
 in an anonymous environment
 On any day, CBLO instrument for the next seven business days and
three month end dates are made available\
 Dealing allwed for settlement types: T+0 and T+1
 CBLO is a discounted instrument traded on Yield:Time priority
 Matched deals are novated and CCIL assumes the role of central counterparty
 Settlement of deals guaranteed by CCIL
 Obligation of members determined through multilateral netting of trades
 First, net CBLO deliverable are debited from members account, securities underlying as
collateral are blocked
 Second, net funds deliverable by members is received
 After funds received, CBLO credited to lender’s account and funds credited to borrower’s
 Shortage handing – LOC, creation of CBLO, blocking of funds receivable, blocking of CBLO
Lenders in CBLO
Borrowers in CBLO
CBLO Daily Avg. Traded Value (Cr.)
Money Market Share
Money Market Rates

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