"Cash Blocked Funds" in the context of banking and financial instruments refers to a situation where a certain amount of cash is reserved or set aside in a bank account and is "blocked" for a specific purpose. This means the funds are not freely accessible for general use until certain conditions are met or the block is lifted. Here are some key aspects of cash blocked funds in banking:

1. Purpose of Blocking Funds: Funds are typically blocked to provide a guarantee or collateral for a transaction. For example, in the case of a large purchase or project, a party may need to prove they have sufficient funds to complete the deal.

2. Letters of Credit and Guarantees: Blocked funds are often used in issuing letters of credit or bank guarantees. These instruments assure the seller that the buyer has the necessary funds or creditworthiness to complete the transaction.

3. Duration of Blocking: The funds are blocked for a specific period, which is agreed upon by the parties involved. This period aligns with the duration of the underlying transaction or project.

4. Risk Mitigation: By blocking funds, banks can mitigate the risk associated with financial transactions, especially in international trade where the credibility of parties can be uncertain.

5. Proof of Funds: Blocked funds can be used as proof of funds in various transactions, showing that the party has the financial means necessary to fulfill their obligations.

6. Regulatory Compliance: Blocking funds can also be a requirement under certain regulatory frameworks to ensure that funds are available for specific purposes, like project financing, investment undertakings, or compliance with financial regulations.

7. Bank Involvement: Banks play a critical role in the process of blocking funds. They ensure that the funds are set aside and are only released under the conditions agreed upon in the blocking arrangement.

8. Impact on Liquidity: For the entity whose funds are blocked, this can impact liquidity since the blocked amount is not available for other uses until the block is lifted.

9. Documentation and Verification: The process usually requires formal documentation, and the bank may issue a letter or certificate indicating the blocked status of the funds.

Cash blocked funds are a significant tool in financial transactions, providing a security mechanism and ensuring commitment from the parties involved in high-value or sensitive deals. They are a common feature in international trade, large-scale investments, and other financial arrangements where proof of fund availability is crucial.