Collateralized Borrowing and Lending Obligation (CBLO) is a money market instrument that facilitates borrowing and lending between institutional participants who may be restricted from the interbank call money market in India. It requires borrowers to provide eligible securities as collateral and operates in a fully collateralized environment, with various maturities available for loans. The process involves members needing to establish a specific account with the Clearing Corporation of India Ltd. (CCIL) and submit bids in the auction market for lending.

1. COLLATERALIZED BORROWING AND
LENDING OBLIGATION
• Collateralized borrowing and lending obligation (CBLO) is a money market instrument
• It represents an obligation between a borrower and a lender concerning the terms and conditions of a loan.
• CBLOs allow those restricted from using the interbank call money market in India to participate in the
short-term money markets.

2. HOW A CBLO WORKS
• To access these funds, the institution must provide eligible securities as collateral—such as Treasury
bills that are at least six months from maturity.
• The CBLO works like bond the lender buys the CBLO and a borrower sells the money market instrument
with interest.
• The CBLO facilitates borrowing and lending for various maturities, from overnight to a maximum of one
year, in a fully collateralized environment.

3. REQUIREMENTS FOR A CBLO
• To borrow, members must open a Constituent SGL (CSGL) account with the CCIL, which is used to
deposit the collateral.
• Types of financial institutions eligible for CBLO membership include insurance firms, mutual
funds nationalized banks, private banks, pension funds, and private dealers.
• Members willing to lend must submit their bids in the CBLO auction market
• The minimum lot size for the CBLO auction market is Rs.50 lakhs and the multiple lot size is Rs.5 lakhs

4. KEY TAKEAWAYS
• CBLO is a money market instrument that represents an obligation between a borrower and a
lender.
• These instruments are operated by the Clearing Corporation of India Ltd. (CCIL) and Reserve Bank
of India (RBI), with CCIL members being institutions with little to no access to the interbank call
money market in India.
• The instrument works like a bond where the lender buys the CBLO and a borrower sells the money
market instrument with interest.