MIBOR

Indian Economy glossary

Also called: Mumbai Interbank Offered Rate · Topic: Financial Markets, Instruments, Insurance and Pensions · NCERT: Beyond NCERT

Meaning

MIBOR (Mumbai Interbank Offered Rate) is India's benchmark interest rate for overnight lending between banks. It is published by FBIL (Financial Benchmarks India Ltd). Lenders use it as a reference point to price floating-rate loans, where the interest rate moves with the benchmark. It is also used to price overnight index swaps (OIS).

Example

In an overnight index swap, one party pays a fixed interest rate. The other party pays a floating rate that follows MIBOR. If MIBOR rises, the side paying the floating rate pays more.

Don't confuse with

  • LIBOR: LIBOR was the former global benchmark for interbank lending. It was phased out by June 2023 after a rigging scandal. MIBOR is an Indian benchmark and is still in use.
  • Repo rate: the repo rate is the policy rate RBI sets. MIBOR is a market rate that comes from actual lending between banks.

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