Skip to main content

What are ‘Significant Benchmarks’?

Reserve Bank of India (RBI) has notified Modified Mumbai Interbank Forward Outright Rate (MMIFOR) administered by FBIL as a ‘significant benchmark’.

What are Financial Benchmarks?

Financial Benchmarks mean prices, rates, indices, values or a combination thereof related to financial instruments that are calculated periodically and used as a reference for pricing or valuation of financial instruments or any other financial contract.

What is ‘Significant Benchmark’?

‘Significant benchmark’ means any benchmark notified by Reserve Bank of India (RBI) as a ‘significant benchmark’ under Financial Benchmark Administrators (Reserve Bank) Directions, 2019. RBI notifies a benchmark as a ‘significant benchmark’ taking into consideration its use, efficiency and relevance in domestic financial markets.

Who is Financial Benchmark Administrator?

Financial Benchmark Administrator (FBA) means a person who controls the creation, operation and administration of ‘significant benchmarks’ in the markets for financial instruments regulated by RBI.

FBA shall be a company incorporated in India and shall maintain a minimum net worth of ₹1 crore at all times.

Financial Benchmarks India Pvt. Ltd. (FBIL)

RBI had set up a Committee on Financial Benchmarks (Chairman: Shri Vijaya Bhaskar, Executive Director, RBI) in June 2013 to review the existing systems governing major financial benchmarks in India. 

Based on the recommendations of the Committee, Financial Benchmarks India Pvt. Ltd. (FBIL) was jointly promoted by Fixed Income Money Market and Derivatives Association of India (FIMMDA), Foreign Exchange Dealers’ Association of India (FEDAI) and Indian Banks' Association (IBA) in December 2014. In July 2015, FBIL was recognised by RBI as an independent benchmark administrator. 

FBIL aims to develop and administer benchmarks relating to money market, government securities and foreign exchange in India. 

Which are the ‘significant benchmarks’ administered by FBIL?

Adding to the existing list of ‘significant benchmarks’, RBI has notified Modified Mumbai Interbank Forward Outright Rate (MMIFOR) administered by FBIL as a ‘significant benchmark’.

In light of the cessation of the publication / non-representativeness of US Dollar London Interbank Offered Rate (USD LIBOR) settings after June 30, 2023, FBIL has been accorded approval to cease the publication of the MIFOR after June 30, 2023. Accordingly, the MIFOR administered by FBIL shall cease to be a ‘significant benchmark’ after June 30, 2023.

Consequently, the updated list (w.e.f. July 01, 2023) of ‘significant benchmarks’ administered by FBIL is as follows –

  1. Overnight Mumbai Interbank Outright Rate (MIBOR)
  2. USD/INR Reference Rate
  3. Treasury Bill Rates
  4. Valuation of Government Securities
  5. Valuation of State Development Loans (SDL)
  6. Modified Mumbai Interbank Forward Outright Rate (MMIFOR)
What are the guidelines on administering the ‘significant benchmark’?

On RBI notifying a benchmark as a ‘significant benchmark’, the person administering that benchmark shall make, within 3 months from the date of the notification, an application for authorization to continue administering that benchmark.


References

Financial Benchmarks India Pvt. Ltd. (n.d.). 'Background'. Retrieved from https://www.fbil.org.in/#/aboutus/background

Reserve Bank of India. (2019, June 26). 'Financial Benchmark Administrators (Reserve Bank) Directions, 2019'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11601&Mode=0

Reserve Bank of India. (2020, April 01). 'Government Securities Market in India – A Primer'. Retrieved from https://www.rbi.org.in/Scripts/FAQView.aspx?Id=79

Reserve Bank of India. (2022, December 01). 'Notification of Significant Benchmark'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12414&Mode=0

Reserve Bank of India. (2023, June 23). 'Status of MIFOR as a Significant Benchmark'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12519&Mode=0


Follow at - Telegram   Instagram   LinkedIn   Twitter

Labels:

Comments

Post a Comment

Popular Posts

Reserve Bank of India Act, 1934 – Part-II – Section 17 to 19

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the second article in the series.  Section 17 – Business which the Bank may transact RBI shall be authorized to carry on and transact the several kinds of business hereinafter specified, namely – 17(1) – Accept deposit without interest from the Central / State Government, local authorities, banks and any other persons. 17(1A) – Accept deposit, repayable with interest, from banks or any other person under the Standing Deposit Facility Scheme, as approved by the Central Board, for the purposes of liquidity management.   Bills of Exchange (B/E) & Promissory Note (PN) Bearing 2 or more good signatures, one of which shall be of B/E & PN arising out of Maturing within 17(2)(a) Purchase, sale and rediscou...
Post a Comment
Read more

Reserve Bank of India Act, 1934 – Part-I – Preamble and Section 1 to 13

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the first article in the series. Preamble of the Act RBI to – Regulate the issue of bank notes. Keep reserves for monetary stability in India. Operate currency and credit system of the country to its advantage. The primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth. Chapter I – Preliminary Section 1 – Short title, extent and commencement 1(1) – This Act may be called the Reserve Bank of India Act, 1934. 1(2) – The Act extends to whole of India. Chapter II - Incorporation, Capital, Management and Business Section 3 – Establishment and incorporation of Reserve Bank 3(1) – RBI to take over management of the currency from the Central Government. 3(2) – RBI to have perpetual succession, common seal, and shall by...
Post a Comment
Read more

Reserve Bank of India Act, 1934 – Part-III – Section 20 to 40

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the third article in the series.  Chapter III - Central Banking Functions Section 20 – Obligation of the Bank to transact Government business RBI shall undertake – To accept monies for account of the Central Government and to make payments up to the amount standing to the credit of its account, and to carry out its exchange, remittance and other banking operations. Management of the public debt of the Union. Section 21 – Bank to have the right to transact Government business in India The Central Government shall entrust RBI with – All its money, remittance, exchange and banking transactions in India, and shall deposit free of interest all its cash balances with RBI. The Central Government may carry on money transactions at places where RBI has no branches or agencies and m...
Post a Comment
Read more

Reserve Bank of India Act, 1934 – Part-IV – Section 42 to 45

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the fourth article in the series.  Section 42 – Cash reserves of scheduled banks to be kept with the Bank 42(1) – Every bank included in the Second Schedule shall maintain with RBI an average daily balance at a percent (notified by RBI) of its total demand and time liabilities in India. 42(1A) – RBI may direct every scheduled bank to maintain with RBI, in addition to the balance prescribed under Section 42(1), an additional average daily balance at a rate (specified by RBI). 42(1C) – RBI may specify any transaction or class of transactions to be regarded as liability in India of a scheduled bank. If any question arises as to whether any transaction or class of transactions shall be regarded as liability in India of a schedule bank, the decision of RBI thereon shall be fina...
Post a Comment
Read more

Reserve Bank of India Act, 1934 – Part-V – Section 45B to 45JA

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the fifth article in the series.  Chapter IIIA - Collection and Furnishing of Credit Information Section 45B – Power of Bank to collect credit information RBI may collect credit information from banking companies and furnish it to any banking company in accordance with section 45D. Section 45C – Power to call for returns containing credit information RBI may direct any banking company to submit statements relating to credit information. Section 45D – Procedure for furnishing credit information to banking companies A banking company may apply to RBI to provide credit information. RBI shall furnish the requested credit information without disclosing the names of the banking companies which have submitted the information. RBI may levy fees of up to Rs.25 for furnishing credit...
Post a Comment
Read more