What is the primary function of 'Collateralized Borrowing and Lending Obligation (CBLO)' or its modern replacement Tri-Party REPO in the Indian money market?

💡 Solution & Explanation

Tri-Party REPO serves as a money market instrument that enables financial entities to engage in short-term borrowing and lending backed by collateral securities through the mediation of a third-party clearing corporation. Incorrect options pointing to long-term foreign currency loans or microfinance regulations misrepresent the institutional scope of the short-term wholesale money market. Such secured lending instruments stabilize liquidity management among commercial banks and financial institutions.