The Reserve Bank of India has proposed to develop a new benchmark based on the secured money markets, which will include both basket repo and Treasury bills Repurchase called the Secured Overnight Rupee Rate, Governor Shaktikanta Das said at the monetary policy announcement.
The introduction of this new benchmark was based on the recommendations of the committee set up on the MIBOR benchmark, chaired by Ramanathan Subramanian. The idea was to review the rupee interest rate benchmarks in the country, especially the usage of Mumbai Interbank Outright Rate, also known as MIBOR, and to examine the need for transition to new benchmarks.
The Financial Benchmarks India Ltd. has been requested to take the proposal of SORR forward and recommendations of the committee are under consideration, according to the statement on developmental and regulatory policies.
As of now, there are two benchmarks set out by FBIL. "MIBOR considers uncollateralised transactions and MROR (Market Repo Overnight Rate) is based on the market repo, but TREPS which 60% of the market is not in that. This index (SORR) will capture all secure transactions," Deputy Governor Michael Patra said at the post policy conference.
This has come as MIBOR—based on call money market transactions—is not drawing enough numbers and volume of transactions.
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