Economics • Banking & FinanceMedium
What is the primary function of the 'Collateralized Borrowing and Lending Obligation (CBLOs)' or Tri-Party Repo in the money market?
A. To provide long-term foreign exchange reserves to commercial banks
B. To enable short-term borrowing and lending of funds against government securities through a third-party custodian✓ Correct Answer
C. To regulate retail lending rates for agricultural loans
D. To issue sovereign bonds directly to the public
💡 Solution & Explanation
Tri-Party Repo, formerly known as CBLO, facilitates short-term lending and borrowing transactions against government securities through the mediation of a neutral third-party custodian. This money market instrument provides liquidity management tools for financial institutions without counterparty credit risks. The Clearing Corporation of India Limited typically acts as the central clearing agency for these transactions.
More Economics Banking & Finance questions
- Under the regulatory purview of the Reserve Bank of India, what is the primary structural characteristic of…
- What is the primary operational objective of the 'Bharat Bill Payment System (BBPS)' managed by the National…
- Which institution in India regulates and supervises Housing Finance Companies (HFCs)?
- What is the primary operational role of the 'Clearing Corporation of India Limited (CCIL)'?
- What is the primary operational objective of the 'Securitisation and Reconstruction of Financial Assets and…