UPSC Prelims 2024 Question:

With reference to the Indian economy, "Collateral Borrowing and Lending Obligations" are the instruments of

Explanation:  

• The term “Collateralized Borrowing and Lending Obligation (CBLO)” is discussed in the context of money market instruments. A collateralized borrowing and lending obligation (CBLO) is a money market instrument that represents an obligation between a borrower and a lender concerning the terms and conditions of a loan.
  
  
• CBLOs represent an agreement between a borrower and a lender, where the borrower provides collateral (such as government securities) in exchange for cash from the lender. These short-term instruments facilitate borrowing and lending in a fully collateralized environment, primarily in India’s financial markets.
  
  

Therefore, option (3) is the correct answer.

Subject: Economics | Financial Sectors and Capital Market