India to launch new overnight benchmark rate from July 22

MUMBAI (Reuters) - India will adopt from July 22 a new method to set the overnight interest rate benchmark that will be based on traded levels instead of contributions from market participants, the board that will administer the rate said on Monday.

The new method, which follows an announcement by the Reserve Bank of India in 2013, will replace the current Mumbai Inter-Bank Offer Rate (MIBOR), and will be administered by the board of Financial Benchmarks India Private Ltd (FBIL).

The new benchmark will be called the FBIL Overnight MIBOR and will be based on trade-weighted call money transactions conducted on Clearing Corporation Of India's trading platform between 0900-1000 IST, the board said.

That will mark a contrast to the current MIBOR, which is compiled by polling market participants and is used to benchmark overnight pricing of call money rate in India.

The new FBIL Overnight MIBOR reflects RBI's response to the rigging controversy that affected the London interbank offered rate (LIBOR) last year.

FBIL, jointly set up by market industry and banking bodies, will replace National Stock Exchange and Thomson Reuters in administering the overnight rate benchmark.

(Reporting by Neha Dasgupta; Editing by Anand Basu)