The Reserve Bank of India on 12th May 2023 states that banks financial institutions to ensure that new transactions undertaken by them or their customers do not rely on or are priced using the US$ LIBOR (London Interbank Offered Rate) or the Mumbai Interbank Forward Outright Rate (MIFOR).
The banks and other RBI-regulated entities is part of an advisory emphasising the need to take steps to ensure a complete transition away from LIBOR from July 1.The Financial Benchmarks India Pvt Ltd (FBIL) will cease to publish MIFOR after June 30.
Banks/FIs have been advised to take all necessary steps to ensure insertion of fallbacks at the earliest in all remaining legacy financial contracts that reference US$ LIBOR (including transactions that reference MIFOR).
Banks/FIs are expected to have developed the systems and processes to manage the complete transition away from LIBOR.
The Reserve Bank will continue to monitor the efforts of banks/FIs for ensuring a smooth transition from LIBOR. The central bank had issued an advisory on ‘Roadmap for LIBOR Transition’ in July 2021, where banks/FIs, inter-alia, were encouraged to undertake transactions using widely accepted Alternative Reference Rate (ARR), as soon as practicable and in any case by December 31, 2021, and insert robust fallback clauses in relevant LIBOR-linked financial contracts.The complete transition from LIBOR is a significant event in the global financial markets, which requires continued attention from all stakeholders to mitigate operational risks and ensure an orderly transition.
Link:https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12503&Mode=0