🔴Tri-Party Repo (TREPS) Tri-Party Repo (TREPS) is a short-term money market instrument introduced by the Reserve Bank of India (RBI) and managed by the Clearing Corporation of India Ltd. (CCIL). It facilitates overnight borrowing and lending of funds using government securities (G-Secs) as collateral. Key Features ➡️Introduced in 2018 to replace the Collateralized Borrowing and Lending Obligation (CBLO) system. ➡️The term “Tri-Party” signifies the involvement of three entities: borrower, lender, and a third-party custodian (CCIL). ➡️Transactions are fully backed by G-Secs, Treasury Bills (T-Bills), and other RBI-approved securities. ➡️Regulated by the RBI, ensuring transparency and mitigating risks. ➡️Primarily used for overnight or short-term lending in the interbank market. How TREPS Works? ➡️Participants – Banks, mutual funds, NBFCs, and other financial institutions take part. ➡️Collateral-Based Lending – Lenders provide funds, while borrowers offer G-Secs as security. ➡️Role of CCIL – The third-party (CCIL) acts as an intermediary to ensure secure settlements. ➡️Repurchase Mechanism – Borrowers repurchase the securities after the agreed duration, typically overnight. Advantages of TREPS ✅ More Secure – Fully collateralized with government securities, making it safer than CBLO. ✅ Transparent & Efficient – CCIL acts as a central counterparty, reducing settlement risks. ✅ Enhances Liquidity – Ensures smooth cash flow for banks and financial institutions. ✅ Supports Monetary Policy – Helps RBI regulate short-term interest rates and liquidity. TREPS plays a vital role in India's financial system by ensuring secure, transparent, and efficient short-term liquidity management for banks and financial institutions.