The Reserve Bank of India (RBI) has issued guidelines for setting up of a financial benchmark administrator (FBA) for administering “significant benchmarks” in the markets for financial instruments.
“The robustness and reliability of financial benchmarks are critical for efficient pricing and valuation of financial instruments. The London Inter-Bank Offered Rate (LIBOR) controversy and the related events underlined the need to establish or reform the frameworks for administration and governance of financial benchmarks,” RBI said in a statement.
Benchmarks administered outside India do not fall under the scope of the guidelines, the RBI said in a statement.
RBI said no FBA would administer a ‘significant benchmark’ without obtaining authorisation of the RBI. However, FBAs that were already administering the ‘significant benchmark’ may continue to do so till the disposal of their applications by the Reserve Bank,” it said.
FBA will be a company incorporated in India and maintain a minimum net worth of ₹1 crore at all times, it said.
