LIBOR: RBI asks banks to ensure complete transition from LIBOR by July

The Reserve Bank of India (RBI) told banks and other regulated entities to ensure a complete transition away from the London Interbank Offered Rate (LIBOR) from July 1.

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, RBI said Friday.

The central bank advised banks and financial institutions not to do new LIBOR-linked or the Mumbai Interbank Forward Outright Rate (MIFOR)-linked financial deals.

Banks in India have already been encouraged to undertake transactions using widely accepted alternative reference rate (ARR) since Decemvber 2021.

RBI said that it would continue to monitor the efforts of banks and FIs for ensuring a smooth transition from LIBOR.

The Financial Benchmarks India Pvt. Ltd will cease to publish MIFOR after June 30. The Financial Conduct Authority of the UK announced the withdrawal of LIBOR settings in 2021 following wide-scale allegations of malpractice.