1. Collateralized Borrowing and Lending Obligation
CBLO
Collateralized Borrowing and Lending Obligation

2. Indian Money Market Call/ Notice/ Term Money Repo Commercial Paper
Certificate of Deposit
Treasury Bills
CBLO

3. Why Money Markets? Money Market (under 1 year)
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)

4. Indian Money Market T-Bill, CP, CD Call Money, Repo, CBLO
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 mismatches
Predominantly over night money market
Over 90% of activity in Call, Repo & CBLO in overnight segment

5. 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
CBLO

6. 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

7. Repo 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

8. What is CBLO ?
CBLO was conceived and developed by CCIL for facilitating deployment in a collateralized environment.
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.

9. Why CBLO?
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

10. 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 funds

11. 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

12. Settlement
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 account
Shortage handing – LOC, creation of CBLO, blocking of funds receivable, blocking of CBLO receivable

13. Lenders in CBLO

14. Borrowers in CBLO

15. CBLO Daily Avg. Traded Value (Cr.)

16. Money Market Share

17. Money Market Rates