Mumbai Interbank Offered Rate (MIBOR)
Candlefocus EditorThe rate is calculated using input from the domestic interbank money market. A panel of 30 banks and primary dealers report their borrowing costs, and the most active banks are given more weight in the calculation process. MIBOR is calculated and disseminated by the Fixed Income Money Market and Derivatives Association of India (FIMMDA).
MIBOR was first established in 1998, inspired by the more famous London InterBank Overnight Rate (LIBOR), which has become the world’s most popular benchmark rate. Since then, MIBOR has come to be used as the primary indicator of the value of money in India's overnight financial market, providing a reliable benchmark for traders, investors, and banks to assess the borrowing environment.
The MIBOR rate has a direct impact on retail consumers in India, such as those who take out home loans, mortgages, and car loans. If the MIBOR rate is low, the reserve requirements that banking institutions must maintain with the Reserve Bank of India are also reduced, leading to lower borrowing costs for banks. This, in turn, means that loan rates across the country also decrease, helping to stimulate economic growth.
MIBOR is an important benchmark and risk management tool for the Indian banking industry. Because the rate helps to determine borrowing costs, it forms a key component of the wider economic climate, providing a reliable indicator of financial market conditions.