RBI sets up committee to review process of financial benchmarking

The Reserve Bank of India (RBI) has constituted a committee to study the various issues relating to financial benchmarks in the context of the recent global developments and the related reforms implemented by various international agencies.

There is a need to review the process of computation and dissemination of major financial benchmarks in India, the governance mechanisms in the institutions involved in computing the benchmarks and other related issues, RBI said in a release issued today.

The committee, to be chaired by RBI executive director P Vijaya Bhaskar, would have representation from select market participants, CCIL and academia. Senior officers from RBI's financial markets department, department of banking operations and development and legal department will also be members of the committee.

The committee will study all major financial benchmarks in India with a view to assessing their current relevance / usage, fallback mechanisms in place in the event of benchmark being rendered obsolete and suggest changes, if any, for inclusion of new benchmarks or exclusion of some of the existing benchmarks, RBI said in its release.

The committee will also study international experience in addressing issues relating to benchmarks and draw suitable lessons therefrom relevant to the Indian context.

Besides, the committee will examine the governance mechanisms within the organisations computing the benchmarks with a view to assessing conflicts of interest, if any, and suggest measures for mitigating such conflicts and enhancing transparency. It will examine the need for regulators' involvement in computation and dissemination of benchmarks and if so, advise on appropriate systems and processes therefor.

The committee has been mandated to suggest suitable mechanisms for dealing with transition issues arising out of legacy contracts in the event of markets shifting to a new benchmark, propose a system of supervisory oversight in respect of institutions involved in computing /disseminating the benchmarks and examine and advise on any other related issues.

The committee has been directed to submit its report latest by 31 December 2013.

Application for bank licence: RBI also today clarified that it would receive applications for new bank licence on 1 July  and that intending applicants for setting up new banks in the private sector can submit their applications up to 5.45 pm to the chief general manager-in-charge, department of banking operations and development at its central office although its offices will remain closed for public transactions.

RBI had issued a press release on 24 June stating that all its offices in Mumbai and Navi Mumbai will remain closed for public transactions on 1 July to facilitate annual closing of RBI's accounts.