With reference to the Indian economy, “Collateral Borrowing and Lending Obligations are the instruments of:
- A. Bond market
- B. Forex market
- C. Money market
- D. Stock market
Answer: C
Explanation
Collateralized Borrowing and Lending Obligation (CBLO) is a money market instrument developed by the Clearing Corporation of India Ltd. (CCIL) and regulated by the Reserve Bank of India (RBI). It allows market participants to borrow and lend funds against collateral, typically government securities. CBLOs facilitate short-term liquidity management for banks, financial institutions, and other entities, operating within the money market, which deals with short-term debt instruments. The bond market deals with long-term debt, the forex market with currency exchange, and the stock market with equity shares. Understanding various financial market instruments is essential for the UPSC Economy syllabus.