T Rabi Sankar: Financial benchmarks in India - a coming of age

Speech by Mr T Rabi Sankar, Deputy Governor of the Reserve Bank of India, at the seminar organised by Financial Benchmarks India Private Limited (FBIL), Mumbai, 28 November 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
01 December 2022

Smt. Usha Thorat, Chairperson, FBIL, Shri R.N. Kar, CEO, FBIL, distinguished speakers, colleagues and friends. It is a pleasure to be speaking today at the annual dinner of the Financial Benchmarks India Limited. Over the last decade, following the LIBOR problems, international attention to reform financial benchmarks has been a major component of the post-GFC regulatory overhaul of financial systems. Today, as we stand in the final stages of transition away from LIBOR towards alternative benchmarks, is an opportune moment to look back at the reforms undertaken in financial benchmark administration in India and assess the progress.


1. Financial benchmarks, used as reference for pricing, valuation and settlement of financial instruments, are a key driver of price integrity of financial markets. From deciding the interest rate on a retail loan to determining the pay-off in a complex derivative, financial benchmarks are ubiquitous and deeply embedded in financial systems. By promoting standardisation, they facilitate liquidity in markets thereby lowering transactions costs. Robust benchmarks promote financial stability by improving transparency in pricing and reducing information asymmetry. Use of benchmarks in valuation helps ascertain the fair value of a financial instrument and incentivizes trading in the instrument. Financial benchmarks also facilitate monetary policy transmission and help assess the efficacy of such transmission.