RBI directs banks to complete transition away from the London Interbank Offered Rate

The Reserve Bank of India (RBI) has issued an advisory to banks and other RBI-regulated entities, emphasizing the need to take steps to ensure a complete transition away from the London Interbank Offered Rate (LIBOR) from July 01, 2023. The key messages in the advisory include:

1. Banks / Financial Institutions (FIs) are advised to ensure that no new transaction undertaken by them or their customers rely on or are priced using the US$ LIBOR or the Mumbai Interbank Forward Outright Rate (MIFOR).
2. The Financial Benchmarks India Pvt. Ltd. (FBIL) will cease to publish MIFOR after June 30, 2023.
3. Banks/FIs are 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).
4. Banks/FIs are expected to have developed the systems and processes to manage the complete transition away from LIBOR.