They had not inserted fallback clauses into all their financial contracts that reference U.S.$ LIBOR or the corresponding domestic Mumbai Interbank Forward Outright Rate (MIFOR). Further, consumer lending products including mortgages, credit cards and student loans, among others, too use it as a benchmark rate. Every business day before 11 a.m. (London time), banks on the LIBOR panel make their submissions to news and financial data company, Thomson Reuters. Derivates refer to financial contracts whose value is related to a specific indicator, commodity or financial instrument. Thus, making it a prevailing transaction-based rate and drifting away from the requirement of an expertise judgement as in LIBOR.

Source: The Hindu May 18, 2023 10:26 UTC