The Reserve Bank of India (RBI) has given a warning to banks and other RBI-directed substances accentuating the requirement for readiness for the change away from London Interbank Offered Rate (LIBOR) The RBI said banks and monetary foundations are urged to stop going into new monetary agreements that reference LIBOR as a benchmark. It said all things considered, they should utilize any broadly acknowledged elective reference rate (ARR), when practicable, and regardless by December 31, 2021.
“Banks and monetary foundations are encouraged to join strong fallback provisions in all monetary agreements that reference LIBOR and the development of which is after the reported end date of the LIBOR settings,” the summit bank said. The RBI said banks and monetary organizations ought to guarantee that new agreements went into before December 31, 2021 – that reference LIBOR and the development of which is after the date on which LIBOR stops – incorporate fallback provisions. Banks should stop utilizing the Mumbai Interbank Forward Outright Rate (MIFOR), a benchmark which references the LIBOR, when practicable and in any occasion by December 31, 2021, it said.