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    Question

    The Reserve Bank of India (RBI) has asked banks and

    financial institutions to adopt by _______ a widely accepted Alternative Reference Rate, such as the Secured Overnight Financing Rate (SOFR), to complete the transition from the scandal-hit London Interbank Offered Rate (LIBOR) and Mumbai Interbank Forward Outright Rate (MIFOR).
    A July 1,2023 Correct Answer Incorrect Answer
    B August 31,2023 Correct Answer Incorrect Answer
    C September 1,2023 Correct Answer Incorrect Answer
    D October 1,2023 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    The Reserve Bank of India (RBI) has asked banks and financial institutions to adopt by July 1 a widely accepted Alternative Reference Rate, such as the Secured Overnight Financing Rate (SOFR), to complete the transition from the scandal-hit London Interbank Offered Rate (LIBOR) and Mumbai Interbank Forward Outright Rate (MIFOR). Banks and private companies were using LIBOR as the benchmark rate for raising funds abroad. It was a key benchmark for setting the interest rates charged on adjustable-rate loans, mortgages and corporate debt. New transactions are now predominantly undertaken using SOFR and the Modified Mumbai Interbank Forward Outright Rate (MMIFOR). SOFR is considered a more accurate and more secure pricing benchmark.

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