The Reserve Bank of India (RBI) will review after six months the ban imposed last week on the use of Mumbai inter-bank forward rate (Mifor). | |
| The RBI has given the market six months to switch over from Mifor, which is derived from the London Inter-bank forward rate (Libor) and the six-month forward premium for dollars. |
| |
| RBI is keen on developing and greater use of rupee benchmarks and was mainly considering Mibor as a replacement for Mifor. |
| |
| A review will be conducted after six months and any decision taken will be to ensure the market is not disrupted, Shyamala Gopinath, deputy governor of RBI, said on Saturday on the sidelines of a conference on retail banking. |
| |
| She said RBI will also phase out quantos from the Indian foreign exchange market, which asserts last week's notification that the central bank will, henceforth, not allow use of any non-rupee benchmarks for interest rate derivatives. |
| |
| Quantos are Libor swaps settled in rupees. "I think a Libor benchmark for rupee transactions, like quanto, will not be allowed any more," Gopinath said. |
| |
| She said RBI was planning to put in place guidelines on outsourcing of information technology services by banks and also considering bringing credit card disputes within the ambit of the banking ombudsman scheme. |
| |
| While building a regulatory oversight with regard to credit cards, RBI needs to ensure that neither does it reduce the efficiency of the system nor hampers credit card usage, she said. |
| |
| On the opportunities and challenges in retail banking, Gopinath said apart from diversifying income streams, retail business has put comparatively less provisioning burden as the impaired assets are far lower than the overall bank loans and advances. |
| |
| She, however, cautioned that owing to bundling of services and delivery channels, potential conflicts of interest tend to increase in universal banks and financial conglomerates. |
| |
|
| |
