On January 21, 2021, the State Bank of India (SBI) has executed two inter-bank short term money market deals with pricing linked to SOFR (Secured Overnight Financing Rate) through its Hong Kong (China) branch.
- The transaction states the growth of SBI in Alternate Reference Rates (ARRs).
- ARRs are overnight rates which are published at the end of the overnight borrowing period. This means they are “backward-looking.”
- It should be noted that SBI is one of the first major banks to sign the ISDA (International Swaps and Derivatives Association) 2020 IBOR Fallbacks protocol on December 11, 2020.
SOFR is a benchmark interest rate that banks use to price dollar-denominated derivatives and loans. Notably, SOFR will replace USD LIBOR (London Inter Bank Offered Rate) by December 2021. The decision regarding the closing of LIBOR was taken by Financial Conduct Authority (FCA) in the United Kingdom (UK).
- SOFR is based on transactions in the Treasury repurchase market where investors offer banks overnight loans backed by their bond assets.
Recent Related News:
i.According to a study conducted by State Bank of India (SBI) Research, North-Eastern (NE) states (All NE statescombined as one) topped the list of states in managing Pandemic, Bihar came second, followed by Uttar Pradesh.
ii.On 4th December 2020, CREDAI-MCHI partnered with State Bank of India, Google and BookMyShow for the first virtual edition of India’s largest real-estate expo from 4th December 2020 to 13th December 2020.
About SBI (State Bank of India):
Founded– July 1, 1955 as SBI
Headquarters– Mumbai, Maharashtra
Chairman– Dinesh Kumar Khara
Tagline– The banker to every Indian; With you all the way; Purely banking nothing else; The nation banks on us; A bank of the common man