Ready to conduct daily operations in Alternate Reference Rates: Exim Bank

Export-Import Bank of India on Tuesday said it is ready to conduct its daily operations in Alternate Reference Rates (ARR) following cessation of the London Interbank Offered Rate (LIBOR).

In 2017, the UK Financial Conduct Authority announced that the underlying markets upon which LIBOR is derived, were insufficiently active to offer a sustainable interest rate benchmark. It had also announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative from December 31, 2021.

''Given the bank's external orientation, it has substantial exposure in foreign currency, including USD. Accordingly, the bank has been proactive in identifying its exposure on account of LIBOR transition and taking steps to ensure readiness in line with global best practices,'' Exim Bank's Managing Director Harsha Bangari said in a release.

The bank has successfully transitioned its non-USD LIBOR-linked assets as well as liabilities well before the regulatory deadline of December 31, 2021 and has been proactive in reaching out to customers in offering ARR-based as well as fixed rate products in multiple currencies, she said.

The development finance bank has set up an internal multi-disciplinary steering committee for LIBOR transition to ensure the smooth transition and systematic implementation of ARRs into the bank's business.

Its board has also approved a policy framework to address the risks arising from LIBOR transition, the release said.

The bank is in advanced stages of renegotiating and updating its underlying financial contracts and arriving at an ARR for continuation of the existing contracts and transactions.

Exim Bank has upgraded its IT systems for addressing any issues arising out of this transition, particularly in derivative, borrowing and lending transactions, thereby also enabling the bank to undertake fresh ARR linked transactions.