Background
With the imminent discontinuation of the publication of the
London Interbank Offered Rate (LIBOR) by the end of 2021 for most
currencies, the Reserve Bank of India (RBI) by its circular dated 8
December 2021 (Circular) amended the RBI's Master Direction -
External Commercial Borrowings, Trade Credits and Structured
Obligations dated 26 March 2019 (ECB Master Directions) to provide
for a risk free benchmark rate as an alternative to the LIBOR
(which has been used since inception for majority foreign currency
borrowings).
LIBOR has been a preferred benchmark rate for the syndicated
loan markets and as a pricing source by financial markets globally
and in India for a wide array of financial instruments including
loans and derivative products. In view of the cessation of
publication of LIBOR, the RBI in August 2020 had indicated to all
the banks and the financial institutions to frame a board-approved
plan, outlining an assessment of exposures linked to the
