LIBOR was a globally recognized benchmark interest rate that indicated the average rate at which major international banks could borrow unsecured funds from one another in the London interbank market for short-term periods, ranging from overnight to 12 months.
It was calculated daily based on submissions from a panel of leading banks (including Bank of America, Barclays, and JPMorgan Chase) estimating their borrowing costs in five major currencies: USD (US Dollar), EUR (Euro), GBP (Great Britain Pound), JPY (Japanese yen), and CHF (swiss franc). It is now discontinued from 2025.
It was introduced in 1986 by the British Bankers' Association (BBA). LIBOR became the cornerstone for pricing trillions in financial products worldwide, including adjustable-rate mortgages, corporate loans, derivatives (e.g., interest rate swaps), and bonds. It reflected interbank borrowing costs and influenced consumer rates like credit cards and auto loans.
MIBOR (Mumbai Interbank Offered Rate)
MIBOR is India's primary benchmark interest rate for the interbank market, representing the average rate at which major banks in Mumbai lend unsecured funds to each other, primarily on an overnight basis (with tenors up to 3 months).
It serves as a reference for pricing rupee-denominated financial products like loans, deposits, bonds, forward rate agreements (FRAs), interest rate swaps (IRS), and floating-rate notes.
Published daily by Financial Benchmarks India Pvt Ltd (FBIL), a joint venture of FIMMDA (Fixed Income Money Market And Derivatives Association Of India) , FEDAI (Foreign Exchange Dealers' Association of India), and IBA (Indian Banks' Association), it reflects short-term liquidity and funding costs in the Indian money market.
Launched on June 15, 1998, by the National Stock Exchange (NSE) under the Committee for the Development of the Debt Market, as India's equivalent to LIBOR for the call money market. Initially polled from 30 banks and primary dealers, it expanded to term rates (14-day, 1-month, 3-month).
In 2015, administration shifted to FBIL, replacing the "FIMMDA-NSE MIBOR" with the transaction-based FBIL Overnight MIBOR to enhance transparency and curb manipulation risks seen in global benchmarks like LIBOR.
Based on actual trades in the Negotiated Dealing System-Call (NDS-Call) platform, using a volume-weighted average of rates from the first hour of trading (9-10 a.m. IST), it is announced around 10:45 a.m. IST.
MIBOR Influences RBI monetary policy transmission (e.g., linking to repo rate changes), corporate borrowing costs, and derivatives pricing. It's used for overnight indexed swaps (OIS) and as a base for external benchmarks in retail loans (per RBI mandates since 2019).
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