State Bank of India has adopted a new benchmark in place of the London Inter-Bank Offered Rate, which has been used to price foreign currency loans for decades. The global benchmark will be discarded for new contracts from December 2021at the behest of international regulators because of its susceptibility to manipulation and the risks its overuse poses during a crisis.
In a statement SBI said that it has already started offering ARR (alternate reference rates) -based products to customers. The country’s largest bank has also started knowledge sharing sessions to increase awareness of the new product among corporate customers.
Under the Libor transition process, from January 1, all new transactions will be referenced to the new benchmark rates as directed by the RBI and global banking regulators.