UPSC Prelims 2024 · GS Paper I
Question 40: Economy and Social Development
With reference to the Indian economy, “Collateral Borrowing and Lending Obligations” are the instruments of :
AnswerUPSC’s answer is (c).
A Collateralised Borrowing and Lending Obligation (CBLO) was a money market instrument introduced by the Clearing Corporation of India Ltd. Participants borrowed and lent funds for short periods against government securities held as collateral. Money market instruments deal in short-term funds, up to a year. Remember: CBLO, call money, repo, treasury bills and commercial paper are money market instruments, while bonds belong to the debt (bond) market.
Why each option is right or wrong
- (a) Wrong: bonds are long-term debt securities, not CBLOs.
- (b) Wrong: CBLO is a rupee funds instrument, not a currency instrument.
- (c) Right: CBLO is a short-term money market instrument.
- (d) Wrong: it is not an equity or share instrument.
Worth knowing: CBLO was discontinued and replaced by the Tri-party Repo (TREPS) in 2018, so the term is now historical; UPSC's answer of money market stands.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2024, General Studies Paper I, Series A. The paper on upsc.gov.in.