RBI introduces new interest rate benchmark
Reserve Bank of India (RBI) has decided to float a new interest rate benchmark — the Secured Overnight Rupee Rate (SORR) — to capture the essence of the broader money markets and to improve credibility of the index.
The new benchmark will be based on the secured money market transactions — both market repo and tri party repo (TREPS). Together, they account for 98% of overnight money markets and include participation from both banks and non-banks.
The SORR, therefore, would be more representative of the overnight market funding rate than the call money market.
«The index that we will have now will capture all secured transactions,» deputy governor Michael Debabrata Parta said Friday at a post-policy media interaction, responding to a query from ET.
The RBI's decision to introduce this was based on the recommendations of the committee on Mumbai Interbank Outright Rate (MIBOR) benchmark which reviewed the interest rate benchmarks in India.
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