RBI asks banks to complete transition away from LIBOR from July 1

Mumbai, May 12, 2023 

The Financial Conduct Authority (FCA), U.K., in a press statement dated March 5, 2021 had announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative.

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.

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.

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 U.S. Dollar LIBOR (including transactions that reference MIFOR). “The banks/FIs are expected to have developed the systems and processes to manage the complete transition away from LIBOR,” the RBI said adding 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.

[The Hindu]