2021: A Critical Year For LIBOR Transition In India

As well as ringing in the start of a hopefully brighter and better 2021, January also saw Indian banks testing the waters of LIBOR transition, with State Bank of India and ICICI Bank involved in their first alternative risk free rate transactions. Utilising the US dollar Secured Overnight Financing Rate (SOFR), these deals signal that the Indian market is at last receptive to the prospect of LIBOR transition, having been initially slower to react than other markets.

The 2021 deadline for the cessation of LIBOR dates back to 2017 when the Financial Conduct Authority commenced the discontinuation process, pledging not to compel panel banks to publish LIBOR beyond the end of 2021. Despite the impact of the COVID-19 pandemic which initially appeared as though it may cause the regulators to extend the status quo, the financial repercussions of the crisis have only served to reinforce the inadequacies of LIBOR, providing momentum to the replacement process globally. That