Hey,
Before I share with you what is replacing LIBOR, I want to tell you the full form of the acronym. It stands for London Interbank Offered Rate. Earlier the RBI ( the central bank of India) was lending money in regards to LIBOR in all its international banking divisions. Keep reading below to know more.
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In the past two years, it has been decided that LIBOR will be replaced with Alternate Reference Rate (ARR). This was done because of the mandate given by the Reserve Bank of India ( RBI). The mandate is followed by all banks and other financial institutions in India. They also announced that USD loans, Sterling Overnight Interbank Average (SONIA) for GBP loans etc will be impacted.
It is necessary to know what is LIBOR replacement as the bank ( RBI) now conducts all its deals for overseas branches and domestic branches alike in ARR. This impacts all the stakeholders in the international market.
Ever since the new system of ARR has been introduced; aspects like potential customer protection, and reputational and litigation risks have been thought over as well. This is done to make sure there are minimal or no disruptions to the safety of financial institutions and the overall financial stability of the economy.
This is all from my end on what is replacing LIBOR.
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What is replacing LIBOR ?
Prisha
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2022-08-12T18:57:20+00:00 2022-08-12T18:57:21+00:00Comment
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