IBA to push for MIBOR as the benchmark rate
By Ankit Sharma
Print    Email    RSS   
Mumbai: Indian Banks Association (IBA), in a proposed meeting with Reserve Bank of India (RBI) is expected to discuss the issue of a uniform short-term benchmark rate, which is applicable to all banks and forms the basis of pricing the floating rate loans.

Presently there is no reference rate like the London inter-bank offered rate (LIBOR), which is followed by the British Bankers Association, so the loans and deposits are priced based on the credit risk and asset-liability gap. RBI has earlier also pulled the banks for different Prime Lending Rates (PLRs) adopted by banks and a lack of transparency regarding their formulation.

IBA has stepped up its effort to bring in such an indicative inter-bank term money rate and Mumbai inter-bank offered rate (MIBOR) is being visualized as India's answer to LIBOR. MIBOR, if adopted will eliminate the fuzziness in loan and deposit pricing and usher in more transparency in the entire system.

MIBOR can be a basis of calculating the pricing of  floating rate loans, which can be a factor above the MIBOR (X + MIBOR), based on the credit profile of the borrower. Similarly deposit rates can be a factor minus the MIBOR (X - MIBOR) depending on the funds needed by the bank.

IBA has decided to identify ten large banks, which will offer their rates on a daily basis. These individual rates will be used to work out a benchmark rate, which will be announced at a particular time everyday by the IBA. Presently the MIBOR, which was developed by the National Stock Exchange (NSE) is mainly used for call rates.

(Comments Posted : 0) Post Your Comments
Show All Comments
 Select a product:

 Select a product:

Carnival of Indian Personal Finance Blogs #4
Carnival of Indian Personal Finance Blogs #3
Top up loans: toppings on your home loan
The right age for home loans!
IBA to push for MIBOR as the benchmark rate

OUT MUSCAT 彡((+27717104310 SOHAR - ABORTION...
PINJORE: CaℒL Giℛℒs In PiNjOrE 09915787550...
PINJORE: CaℒL Giℛℒ In PiNjOrE 09915787550...
how to gate my home loan certificate

Canara Bank earned a profit of 60%. Feb 6, 2015
New Branch of Laxmi Vilas bank at Vijayawada Jan 30, 2015
Home loan EMIs expected to drop down Jan 21, 2015
Corporation Bank received MSME banking excellence award 2014 Jan 19, 2015
Home loan rates set to fall, after reduction in repo rate Jan 16, 2015
News Archive