Page 37 - Banking Finance February 2023

ARTICLE

SOFR is based on transactions in the Treasury repurchase market
The SOFR is based on data from observable transactions rather than on estimated borrowing rates, as is the case
with LIBOR.
SOFR is based on Treasury repurchase market (Repo), Treasuries loaned or borrowed overnight.
Rate is calculated and published at around 8:00 am New York Time the next business day
The Rate is published by the US Federal Reserve Bank of New York.

Other ARRs
Country EU UK JAPAN Switzerland
Current Euro LIBOR GBP LIBOR JPY LIBOR CHF LIBOR
Benchmark
ARR Euro Short-Term Reformed Sterling Tokyo Overnight Swiss Average Rate
Rate (ESTR) Overnight Index Average Rate Overnight (SARON)
Average (SONIA) (TONAR)
Regulator European Central Bank Bank of England Bank of Japan SIX Swiss Exchange
Description Unsecured Unsecured Unsecured Secured
Fully transaction-based Fully transaction-based Fully transaction-based Became a reference
Reflects euro area Encompasses a robust Encompasses a robust interbank overnight
banks' borrowing costs underlying market uncollateralized repo on August
in the wholesale Overnight, nearly risk- overnight call rate 25, 2009
unsecured overnight free reference rate market. Secured rate that
market. Includes a volume- Published on a daily reflects interest paid on
weighted trimmed basis using information interbank overnight
mean provided by money repo
market brokers

Way Ahead
Though LIBOR was in use for many decades, Financial sector was heavily dependent on the same but Alternate Reference
Rate is more secured than the LIBOR and is based on the actual transactions. So, it has been taking LIBOR place more
rapidly. Since in ever changing environment and to go with the pace of time, regular updation is required in order keep
its sanctity and prevent fraudulent activities.

Soon, RBI's Ombudsman scheme to also include housing fin firms
Customers of housing finance companies may soon enjoy the benefit of getting their complaints resolved through
Reserve Bank of India's integrated ombudsman scheme as the central bank is in the process of widening the ambit
of its customer grievance redressal mechanism. RBI, in the annual report of ombudsman scheme, said that its con-
sumer education and protection department is working towards extension of the scheme to HFCs. This may be done
by March 31, 2023. Last year, the coverage of the integrated ombudsman scheme was extended to credit informa-
tion companies and the non-scheduled urban cooperative banks with a deposit size of Rs 50 crore or above.
In November 2021, RBI created a single platform for both bank and non-bank customers for getting speedy resolu-
tion of their grievances. Three erstwhile ombudsman schemes -- Banking Ombudsman Scheme 2006, Ombudsman
Scheme for Non-Banking Financial Companies 2018 and Ombudsman Scheme for Digital Transactions 2019 - were
integrated into a single scheme. RBI said that the volume of complaints received under the ombudsman schemes
during the year 2021-22 increased by 9.39% to 4.18 lakh over the previous year.

32 | 2023 | FEBRUARY | BANKING FINANCE