With reference to the Indian economy, “Collateral Borrowing and Lending Obligations” are the instruments of:
✓ Correct answer: c) Money market
ExplanationCollateralized Borrowing and Lending Obligations (CBLO) are short-term money market instruments used for borrowing and lending funds.They are primarily used by finan- cial institutions such as banks, mutual funds, and insurance com- panies to manage liquidity.CBLO transactions are collateralized, meaning they require secu- rities (such as government bonds) as collateral, reducing credit risk.The instrument was introduced by the Clearing Corpo- ration of India Ltd. (CCIL) to facilitate secure and efficient bor- rowing and lending of funds in the money market.CBLOs facilitate borrowing and lending transactions that are ful- ly collateralized, typically using government securities as collat- eral.CBLOs are primarily used by financial institutions to man- age liquidity and funding needs over short durations, ranging from overnight to one year.Bond Market : The bond market is a financial marketplace where governments, corporations, and other entities issue and trade debt securities (bonds) to raise capital.Investors lend money to issuers in exchange for periodic interest payments
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