Banks to ensure complete transition away from LIBOR: RBI
The Reserve Bank of India (RBI) has issued an advisory to banks and other RBI- regulated entities asking them to take steps to ensure a complete transition away from the London Interbank Offered Rate (LIBOR) from July 1, 2023.
Banks / Financial Institutions (FIs) have been advised to ensure that no new transaction undertaken by them or their customers rely on or are priced using the U.S. Dollar LIBOR or the Mumbai Interbank Forward Outright Rate (MIFOR). As per the directive, the Financial Benchmarks India Pvt. Ltd. (FBIL) will cease to publish MIFOR after June 30, 2023. Banks/FIs are also advised to take all necessary steps to ensure insertion of fallbacks at the earliest in all remaining legacy financial contracts that reference U.S. Dollar LIBOR (including transactions that reference MIFOR).
As per RBI, it will continue to monitor the efforts of banks/FIs for ensuring a smooth transition from LIBOR. The Financial Conduct Authority (FCA), U.K., in a press statement dated March 05, 2021 had announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative.
