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Mumbai (Maharashtra) [India], August 18 (ANI): <keyword id="6354335" type="General" weightage="100" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> on Friday said regulated entities (REs) have the freedom and they must offer all categories of retail loans either on a fixed or <keyword id="1104583" type="General" weightage="20" keywordseo="floating-interest-rates" source="Orion">floating interest rates</keyword> basis. At the time of sanction of EMI-based floating rate personal loans, RBI said regulated entities are required to take into account the repayment capacity of borrowers to ensure that adequate headroom or margin is available for elongation of tenor and or increase in EMI, in the scenario of a possible increase in the external benchmark rate during the tenor of the loan. In the wake of rising <keyword id="6371181" type="General" weightage="20" keywordseo="interest-rates" source="Orion">interest rates</keyword>, RBI said it had received several grievances from consumers related to the elongation of loan tenor and or increase in EMI amount, without proper communication with and or consent of the borrowers. "In order to address these concerns, the REs are advised to put in place an appropriate policy framework meeting the following requirements for implementation and compliance," RBI said. As a part of the new rules, the central bank said: At the time of sanction, regulated entities shall clearly communicate to the borrowers about the possible impact of change in benchmark interest rate on the loan leading to changes in EMI and/or tenor or both. Subsequently, any increase in the EMI or tenor or both on account of the above shall be communicated to the borrower immediately through appropriate channels.At the time of reset of interest rates, regulated entities shall provide the option to the borrowers to switch over to a fixed rate as per their Board approved policy. The policy, inter alia, may also specify the number of times a borrower will be allowed to switch during the tenor of the loan. The borrowers shall also be given the choice to opt for enhancement in EMI or elongation of tenor or for a combination of both options; and, to prepay, either in part or in full, at any point during the tenor of the loan. All applicable charges for switching of loans from floating to fixed rate and any other service charges/ administrative costs incidental to the exercise of the above options shall be transparently disclosed in the sanction letter and also at the time of revision of such charges/ costs by the regulated entities from time to time. REs shall ensure that the elongation of tenor in case of floating rate loan does not result in negative amortisation. RBI said regulated entities shall ensure that these instructions are extended to the existing as well as new loans suitably by December 31, 2023. All existing borrowers shall be sent a communication, through appropriate channels, intimating the options available to them, RBI said. (ANI)

Banks must allow retail borrowers to switch between fixed and floating rates: RBI

<ul><li>After a rate cut in February, the mandate of the central bank was clear: it wants to boost lending and thereby stimulate economic growth. </li><li>However, the country’s commercial lenders have been slow to pass on the rate cut to consumers. </li><li>As a result, the governor of the Reserve Bank of India, <keyword id="6359111" type="UNKNOWN" weightage="20" keywordseo="Shaktikanta-Das">Shaktikanta Das</keyword>, met with the CEO’s of the country banks to do so. The banks complained that they didn’t have much room to cut rates but said they would try their best. </li></ul>After <a href="https://www.businessinsider.in/rbi-policy-update-cuts-interest-rate-citing-low-inflation-and-it-may-boost-growth/articleshow/67880230.cms">a rate cut </a>in February, the mandate of the central bank was clear: it wants to boost lending and thereby stimulate economic growth as the country heads into national elections. And now it wants Indian banks to follow suit. However, the country’s commercial lenders have been slow to pass on the rate cut to consumers in the form of cheaper small business loans, home loans and car loans. As a result, the governor of the Reserve Bank of India, Shaktikanta Das, met with the CEO’s of the country banks - such as Punjab National Bank, ICICI Bank, Kotak Bank, Bank of Baroda etc - yesterday to exhort them <a href="https://www.business-standard.com/article/finance/rbi-governor-das-asks-bankers-to-pass-on-rate-cut-benefits-to-consumers-119022101292_1.html">to cut lending rates</a> for customers so as to encourage consumer confidence and investment. While the banks’ response was mostly non-committal, they said they would <a href="https://www.thehindu.com/business/will-try-to-pass-on-rate-cut-banks/article26333312.ece">try their best to cut rates</a> on home loans and personal loans. They have complained in the past of their high borrowing costs and shrinking margins - both of which are a consequence of their stock of bad loans. They also pointed to a lack of liquidity in the banking system, as consumers are hoarding cash ahead of elections. After the rate cut decision, wherein the base lending rate was cut by 25 basis points to 6.25%, the State Bank of India only cut home loan rates by <a href="https://economictimes.indiatimes.com/markets/stocks/news/sbi-cuts-interest-rate-on-home-loan-by-5-bps/articleshow/67910450.cms">a mere 5 basis points</a>. The only other bank to do the same was Bank of Maharashtra - by the same measly amount. Earlier this week, the chairman of State Bank of India, Rajnish Kumar, said that banks did not <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/headroom-to-cut-rates-does-not-exist-sbi-chairman/articleshow/68044675.cms">have the room to cut lending rates</a> because it would need to cut its deposit rates first. And it couldn’t do this unless other banks did so as well, because otherwise its customers would park their money in banks with higher deposit rates. SEE ALSO: <a href="https://www.businessinsider.in/rbi-policy-update-cuts-interest-rate-citing-low-inflation-and-it-may-boost-growth/articleshow/67880230.cms">India’s central bank cuts interest rate to give growth a chance</a> <a href="https://www.businessinsider.in/rbi-pays-interim-dividend-central-government/articleshow/68057230.cms">The Modi administration’s overspending gets rewarded with an interim dividend from the central bank</a>

India’s central bank is calling on the country’s lenders to lower rates

<ul class="summary-list"><li>The <keyword id="11895523" type="UNKNOWN" weightage="60" keywordseo="federal-reserve" source="Orion">Federal Reserve</keyword> just raised <keyword id="6371181" type="UNKNOWN" weightage="60" keywordseo="interest-rates" source="Orion">interest rates</keyword> again in an effort to stifle sky-high inflation.</li><li>The hikes raise borrowing costs throughout the <keyword id="11893570" type="UNKNOWN" weightage="100" keywordseo="economy" source="Orion">economy</keyword>, from car loans to credit-card debt.</li></ul>Buying a house or racking up credit card debt will get more expensive in the coming weeks thanks to the Federal Reserve's latest <keyword id="12895633" type="UNKNOWN" weightage="60" keywordseo="interest-rate-hike" source="Orion">interest rate hike</keyword>.The central bank <a href="https://www.businessinsider.com/federal-reserve-hikes-interest-rates-july-credit-loans-inflation-recession-2022-7">raised rates again on Wednesday</a>, issuing a 0.75 percentage point hike in its latest move to crush inflation. The increase aims to slow price growth by raising borrowing costs throughout the economy and easing Americans' strong demand. That means all kinds of debt will be more expensive to pay off, from mortgages to credit card balances.When the <keyword id="11894209" type="UNKNOWN" weightage="60" keywordseo="fed" source="Orion">Fed</keyword> lowers rates, payments on loans fall. Conversely, recent hikes made borrowing more expensive. The average rate on a 30-year fixed-rate mortgage reached 5.54% on July 21, up nearly 2.5 percentage points from the level seen at the end of 2021. Bank card rates have also swung higher, meaning holders are paying more interest on their balances. The increases aren't all bad news for Americans. Apart from having a cooling effect on inflation, higher rates mean that those holding their cash in savings accounts will make slightly more in monthly interest.The rate rally is set to continue through the rest of the year. The Federal Open Market Committee — the body that makes rate decisions — expects that "ongoing increases in the target range will be appropriate" in the months ahead, the central bank said in a statement. Projections published by the Fed in June signaled that <keyword id="11918137" type="UNKNOWN" weightage="60" keywordseo="fomc" source="Orion">FOMC</keyword> members expect rates to climb by about one more percentage point by the end of the year to a range of 3.25% to 3.5%.Rate increases serve as the Fed's weapon of choice for fighting inflation. Low rates tend to spur demand and spending, and the central bank lowered its benchmark rate to record lows in early 2020 to buoy the economy during the first lockdowns. Yet low rates can also lift demand well above supply, leading to an imbalance that pushes prices sharply higher.That's certainly been the case over the past 18 months. Year-over-year inflation <a href="https://www.businessinsider.com/inflation-cpi-price-growth-june-2022-7">hit a four-decade high of 9.1%</a> in June, according to the Consumer Price Index, boosted by supply-chain snags and Russia's invasion of Ukraine. That's significantly higher than the 2% target the Fed targets and is the main reason for the central bank's larger-than-usual rate hikes through 2022. There's a good chance the pace of those increases will slow. Gas prices have fallen significantly since peaking in mid-June, signaling the July inflation report will show a significant easing in the one-year rate. Commodity prices have also fallen over the past month, offering relief to Americans paying up for necessities like food and heating.The Fed's benchmark rate also sits in a much better position for addressing high inflation. The current range of 2.25% to 2.5% is broadly viewed by FOMC members as "neutral," meaning it neither stimulates nor restricts the economy. Though the Fed is likely to push rates to restrictive levels later this year, Chair Jerome Powell hinted Wednesday that the speed that it continues to raise rates won't be as telegraphed as past hikes."While another unusually large increase could be appropriate at our next meeting, that is a decision that'll depend on the data we get between now and then," he said. "We think it's time to go to a meeting-by-meeting basis and not provide the kind of clear guidance we provided on the way to neutral."This post has been updated to reflect the most recent Fed interest rate decision.

Mortgages, car loans, and credit card debt are about to get more expensive

<ul class="summary-list"><li>The <keyword id="106488" type="UNKNOWN" weightage="60" keywordseo="bank-of-england" source="Orion">Bank of England</keyword> hiked its main interest rate for the second meeting running Thursday, from 0.25% to 0.5%.</li><li><keyword id="11962842" type="UNKNOWN" weightage="60" keywordseo="central-banks" source="Orion">Central banks</keyword> around the world are grappling with red-hot inflation, which is running at a 30-year high in the UK.</li></ul>The Bank of England has hiked UK <keyword id="6371181" type="UNKNOWN" weightage="60" keywordseo="interest-rates" source="Orion">interest rates</keyword> for the second meeting in a row, as it tries to tackle the strongest inflation in 30 years.The <keyword id="6538058" type="UNKNOWN" weightage="60" keywordseo="boe" source="Orion">BoE</keyword>'s monetary policy committee raised its main interest rate by 25 basis points from 0.25% to 0.5%, in a decision announced Thursday. It followed a 15 basis point hike in December, which was the first upward move since 2018.It comes as global investors brace for the US Federal Reserve to <a href="https://origin.markets.businessinsider.com/news/stocks/federal-reserve-hints-raise-interest-rates-inflation-fomc-meeting-january-2022-1">hike its main rate</a> in March for the first time since December 2018.Central banks are dialing back the huge monetary stimulus they injected to support economies in 2020 and 2021.Inflation is soaring in many economies around the world, as global supply chains struggle to keep up with a sharp rebound in demand.In the UK, inflation hit a 30-year high of 5.4% year-on-year in December. The Bank of England, like other central banks such as the Fed, had played down the chances such red-hot price rises.But the BoE said Thursday: "Given the current tightness of the labour market and continuing signs of greater persistence in domestic cost and price pressures, the committee judges that an increase in bank rate of 0.25 percentage points is warranted at this meeting."Read more: <a href="https://www.businessinsider.com/stock-market-strategy-2022-big-investing-themes-to-profit-bofa-2022-1?r=US&amp;IR=T">Bank of America lays out the 10 key investing themes its vast team of strategists and economists are watching closely — and reveals how investors can profit from each of them</a>Many strategists think the BoE will continue hiking interest rates in 2022. There's uncertainty about the pace and magnitude of increases, however.<a href="https://www.cmegroup.com/trading/interest-rates/bank-of-england-watch-tool.html">Market prices</a> suggest traders on average expect the BoE to gradually raise interest rates to around 1.5% by the end of the year."We still expect two to three hikes in 2022, though recent strength in data now makes three more likely," Peder Beck-Friis, portfolio manager at PIMCO, said in a note before the meeting. "That would bring the policy rate to 1% by year end." The <keyword id="6441867" type="UNKNOWN" weightage="60" keywordseo="pound" source="Orion">pound</keyword> rose after the announcement, and was up 0.3% against the dollar at $1.3614.<a href="https://markets.businessinsider.com/news/stocks/why-are-stocks-down-explained-federal-reserve-earnings-ukraine-tech-2022-1">Global stocks have fallen</a> in 2022 so far as investors come to terms with a new reality in which central banks are no longer supporting economies and <keyword id="11893875" type="UNKNOWN" weightage="100" keywordseo="markets" source="Orion">markets</keyword>.The Fed last month all but confirmed it will raise interest rates in March, with traders expecting the federal funds target range to increase to 0.25% to 0.5%.

The Bank of England just hiked interest rates again, as central banks get serious about red-hot inflation

<ul><li>The <keyword id="6355253" type="UNKNOWN" weightage="60" keywordseo="federal-reserve">Federal Reserve</keyword> remains averse to <keyword id="741038" type="PERSON" weightage="60" keywordseo="negative-interest-rates">negative interest rates</keyword> despite the gloomy economic backdrop, Chairman <keyword id="1727754" type="PERSON" weightage="60" keywordseo="Jerome-Powell">Jerome Powell</keyword> said Wednesday.</li><li>The US economic trajectory is still "highly uncertain and subject to significant downside risks," and additional aid is likely necessary stage a recovery, Powell added in a <a href="https://www.youtube.com/watch?v=tuPIJvLhQmc&amp;feature=emb_titleitle">videoconference</a> with the Peterson Institute for International Economics.</li><li>The refusal to push rates lower comes one day after President Donald Trump <a href="https://markets.businessinsider.com/news/stocks/trump-again-calls-negative-interest-rates-us-tweet-gift-fed-2020-5-1029193284">renewed his call for negative interest rates in the US</a>.</li><li><a href="https://www.businessinsider.com/?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest">Visit the Business Insider homepage for more stories</a>.</li></ul>The Federal Reserve may need to act further to pull the US <keyword id="34412" type="ORGANIZATION" weightage="60" keywordseo="economy">economy</keyword> out of its slump, but negative <keyword id="6371181" type="UNKNOWN" weightage="60" keywordseo="interest-rates">interest rates</keyword> are still out of the question, Chairman Jerome Powell said Wednesday.Potential for the unconventional policy tool resurfaced on Tuesday after President Donald Trump praised the "<a href="https://markets.businessinsider.com/news/stocks/trump-again-calls-negative-interest-rates-us-tweet-gift-fed-2020-5-1029193284">gift</a>" and called on the US to adopt such rates. Even as the current downturn grows "significantly worse than any recession since World War II," the <keyword id="6358156" type="ORGANIZATION" weightage="60" keywordseo="central-bank">central bank</keyword> hasn't changed its stance on pushing its <keyword id="37018" type="PERSON" weightage="60" keywordseo="interest-rate">interest rate</keyword> lower, Powell said."The committee's view on negative rates has not changed. This is not something we're looking at," he said in a <a href="https://www.youtube.com/watch?v=tuPIJvLhQmc&amp;feature=emb_titleitle">videoconference</a> with the Peterson Institute for International Economics.Read more: <a href="https://www.businessinsider.com/stock-picks-to-buy-25-cheap-small-cap-acquisition-targets-2020-5">These 25 under-the-radar companies have been neglected for years — but BTIG says that makes them tempting M&amp;A targets with big stock upside</a>While Powell stopped at detailing what additional actions the <keyword id="45672" type="ORGANIZATION" weightage="60" keywordseo="Fed">Fed</keyword> may take, he noted the US economic rebound will likely be more chaotic than first expected. The nation's path forward remains "highly uncertain and subject to significant downside risks," the chair warned in his prepared remarks."There is a sense that the recovery may come more slowly than we would like, but it will come. And that may mean that it's necessary for us to do more," Powell added in a question-and-answer portion.Powell's bleak tone immediately shook US <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword>. Equities <a href="https://markets.businessinsider.com/news/stocks/stock-market-news-today-index-reaction-fed-powell-economy-stimulus-2020-5-1029197793">erased early gains and opened lower on Wednesday</a> as the Fed chief detailed his view of the current economic backdrop.Read more: <a href="https://www.businessinsider.com/stocks-picks-to-buy-investing-strategy-for-inflation-morgan-stanley-2020-5">MORGAN STANLEY: Buy these 20 stocks built to profit from a mounting inflation comeback that will alter the investing landscape</a>The Fed's refusal to drag rates below zero could be a blessing in disguise for long-term investors, Seema Shah, chief strategist at Principal Global Investors, said. Any short-term benefits such policy would bring the US would likely give way to long-term market dislocation, she added."What's more, experience outside the United States suggests that slashing rates has distorted financial markets, crippled bank lending and threatened pensions systems worldwide," Shah said. "Indeed, central banks have been reconsidering the wisdom of negative policy rates, with the Swedish Riksbank exiting negative rates altogether."The central bank is more likely to boost its asset purchases and lending programs before considering negative rates, the strategist noted. The Fed <a href="https://markets.businessinsider.com/news/stocks/federal-reserve-emergency-corporate-bond-etf-purchases-coronavirus-policy-economy-2020-5-1029191923">began its corporate-bond ETF purchases on Tuesday</a>, opening the first of its credit facilities for companies struggling through the virus-induced collapse.The Fed's interest rate sits at a range of 0% to 0.25%, a historic floor last implemented during the 2008 financial crisis.Read the original article on <a href="https://www.businessinsider.com/negative-interest-rates-not-considered-federal-reserve-policy-jerome-powell-2020-5">Business Insider</a>

The Fed won't use negative interest rates to counteract the coronavirus recession, chairman Jerome Powell says

<div class="image-container float_right"><div class="image"><a href="http://www.flickr.com/photos/67945918@N00/4623729915/">Flickr / Tom Raftery</a></div></div>Quick heads up: <keyword id="6371181" type="UNKNOWN" weightage="60" keywordseo="interest-rates">Interest rates</keyword> keep rising.
The yield on 10-year German bunds hit 2.0% at one point this morning, a level not seen since early 2012.
And US 10-year rates are up to 2.95%, which is a new high for the recent cycle.
The debate about whether this is the result of "tapering" fears or mere normalization after the crisis-inspired plunge inr ates is something others can debate.

Interest Rates Are On The Rise This Morning

<ul class="summary-list"><li>The London Interbank Offered Rate (<keyword id="6386586" type="DEFINITION" weightage="60" keywordseo="LIBOR">LIBOR</keyword>) is a series of benchmark rates used by lenders to determine other short-term <keyword id="6371181" type="UNKNOWN" weightage="60" keywordseo="interest-rates">interest rates</keyword>.</li><li>A variety of financial products like CDs and loans like adjustable-rate mortgages are based on LIBOR, especially the three-month rate.</li><li>Though often a harbinger of trends in bank lending rates, LIBOR is slated to be phased out by 2021. <a href="https://www.businessinsider.com/?hprecirc-bullet"></a></li></ul>Reading the fine print on the terms for a mortgage or a CD, you may come across the phrase "your rate based on the prevalent LIBOR rate." The LIBOR, short for London Interbank Offered Rate, is a fluctuating short-term interest rate that influences the way other interest rates are set in the world of <keyword id="25455" type="ORGANIZATION" weightage="100" keywordseo="finance">finance</keyword>. It serves as a scale for setting the interest earned by debt instruments, like bonds and derivatives, and the interest charged on consumer loans. An estimated $350 trillion worth of outstanding loans and trading contracts around the world are based on LIBOR.<h2>What is LIBOR?</h2>Somewhat like the US <a href="https://www.businessinsider.com/personal-finance/federal-reserve-interest-rates-cut-money-savings-loans" target="_blank" rel="noopener">federal funds rate</a>, LIBOR is an interbank rate: It reflects the interest that major banks charge each other when borrowing for brief periods — anywhere from overnight to 12 months.Actually, there's no one LIBOR. It is based on five major currencies – the US dollar, the Swiss franc, the euro, the pound sterling, and the Japanese yen. Each currency is compiled for loans of seven different durations, ranging from one night to one year (see "current LIBOR rate" below).In total, there are 35 LIBOR benchmarks administered and published every business day by the <a href="https://www.intercontinentalexchange.com/index">Intercontinental Exchange</a> or <a href="https://www.theice.com/iba" target="_blank" rel="noopener">ICE Benchmark Administration </a>(IBA). <h2>How is LIBOR determined?</h2>The IBA gathers a consensus for calculating the average interest rate every morning. Shortly before 7 a.m., the IBA asks an elite panel of 16 global contributor banks how much they are willing to charge other banks for short-term loans.Chosen annually, this panel has a tight membership consisting of financial institutions with a significant presence in the London market. For example, only the Bank of America, Barclays, Citibank, Deutsche Bank, JPMorgan Chase, and UBS represent the US dollar LIBOR. These banks are required to send their answers for each loan maturity period under their country's specific currency. The IBA then calculates the LIBOR employing a standardized, transaction-based, data-driven layered method called the Waterfall Methodology. Once finalized, all 35 LIBOR benchmarks are published around 11:55 a.m. London time. <h2>What is the current LIBOR rate?</h2>The daily fluctuating LIBOR rates vary, depending on the length of the loan. For example, at the end of September 2020, the USD LIBOR rates for loans were:<ul><li>OVERNIGHT = 0.08%</li><li>1 WEEK = 0.11%</li><li>1 MONTH = 0.15%</li><li>2 MONTHS = 0.20%</li><li>3 MONTHS = 0.25%</li><li>6 MONTHS = 0.29%</li><li>12 MONTHS = 0.41%</li></ul>Of all the LIBOR reference rates, the most significant and commonly quoted is the US Dollar Three-Month rate. It is usually referred to as the current LIBOR. <h2>How does LIBOR affect you?</h2>Ordinary individuals and most companies don't get charged LIBOR rates. But the LIBOR does act as a benchmark for many consumer loans, investments, and other financial products, somewhat like the <a href="https://www.businessinsider.com/what-is-the-prime-rate" target="_blank" rel="noopener">prime rate </a>in the US. <h3>Investments Based on LIBOR</h3>The early 1980s saw the development of a whole host of investments based on interest rates and currency exchanges. LIBOR was originally established to offer an interest-rate standard — a baseline rate — for financial products. Some are sophisticated instruments used by multinational corporations, others are as basic as your neighborhood bank's CD.Financial derivativesLIBOR is universally used to price <keyword id="757464" type="PERSON" weightage="60" keywordseo="interest-rate-swaps">interest rate swaps</keyword>, a financial derivative in which two firms come to an agreement to trade rates. One company wants to receive a payment with a variable interest rate (like LIBOR), while the other wants to limit risk by choosing to receive a fixed-rate payment.Certificates of Deposit (CD)If your CD is LIBOR-linked, the bank will provide you an interest rate premium that rises as the LIBOR goes up, or lowers as it goes down. Some CDs average changes quarterly or annually, which ties your CD to the 3-month or 12-month LIBOR. You have the potential to earn a higher interest rate, compared to a fixed-rate CD, but of course, can earn less too. Alternative investments These include sophisticated vehicles like collateralized debt obligations (CDO), a tranche of income-generating assets repackaged to include LIBOR-tied mortgages, auto loans, and corporate bonds.<h3>Loans Based on LIBOR</h3>Lenders use the LIBOR as an index for determining variable interest rates on your financing products, too. Typically, they add a percentage point or two as a constant margin to the LIBOR rate.Adjustable-Rate Mortgages (<keyword id="134449" type="COMPANY" weightage="60" keywordseo="Arm">ARM</keyword>)Mortgages with floating interest rates are one of the most common products based on LIBOR. The interest rate is fixed for the initial period of your mortgage, then resets according to how the market fluctuates during the remaining period of your loan. For example, if you have a 5/1 ARM, it would have a fixed rate for the first five years followed by an adjustable-rate that resets once yearly. That annual reset probably would be based on the 12-month LIBOR. Private Student LoansAt many lending institutions, student loans are typically bound to the three-month LIBOR. This is why most student loans are adjusted quarterly. The upside is that most student loan companies put a cap on their interest rates. So even if the LIBOR goes high, your interest rate will not exceed a set ceiling. <h2>LIBOR past and future</h2>LIBOR dates from 1984. The <a href="https://www.bba.org.uk/" target="_blank" rel="noopener">British Bankers Association</a> created it to establish a reliable source for interest rate-based investments. It grew to become a respected benchmark all over the world—until 2012, when news broke that bankers had been rigging rates for years, mainly to help their derivatives traders. The scandal led to Britain's Financial Conduct Authority (FCA) removing LIBOR from the supervision of the British Bankers Association and turning it over to the ICE Benchmark Administration. n 2017, however, FCA made the announcement that it will no longer support LIBOR — the reason being that banks have slowed down lending to each other, making the index less reliable.LIBOR is set for regulatory phase-out in 2021. After that date, banks will no longer be required to publish their LIBOR rates.<h2>The financial takeaway</h2>LIBOR rates determine the interest rates paid by a variety of investment products and the interest rates charged by variable-rate loans. Trends in LIBOR rates are also often used to estimate the trajectory of central bank rates in the future, and to gauge the overall health of the financial lending system on a global scale.Replacements for LIBOR after 2021 are already being evaluated. The most likely candidate: the <a href="https://www.businessinsider.com/a-new-benchmark-rate-is-replacing-libor-heres-what-you-need-to-know-2018-4" target="_blank" rel="noopener">secured overnight financing rate</a> (SOFR), based on transactions in the US Treasury-bill repurchase market. <h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing:</a></h2><h3><a href="https://www.businessinsider.com/libor-the-end-of-the-worlds-most-important-number-2019-1" target="_blank" rel="noopener">Here's what will happen after the death of the magical number underpinning $350 trillion in trades</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/are-cds-a-good-investment" target="_blank" rel="noopener">If you've ever considered putting money in a CD, now is probably the right time to do it</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/how-to-find-the-best-mortgage-rate" target="_blank" rel="noopener">How to get the best mortgage rate on your new home</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/fixed-rate-mortgage-vs-adjustable-rate-mortgage" target="_blank" rel="noopener">Fixed-rate vs adjustable-rate mortgage: How to decide which one you should get</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/how-to-choose-a-student-loan-college-grad-school" target="_blank" rel="noopener">How to choose a student loan to get the money you need for college or grad school</a></h3>

The LIBOR is a global interest rate that affects the rates of many loans and investments. Here's how it's set, and why it's slated to end

The Indian government was thinking to reset the interest rates on small savings schemes for the upcoming quarter, but because of several protests from individuals who depend on PPFs and post office deposits to meet their financial needs, the decision has been put on a hold. 
 The government had moved to rates linked to the market for small savings products like <keyword id="76579" type="CITY" weightage="100" keywordseo="PPF">PPF</keyword>, KVPs and Senior Citizens Savings Scheme, so that the returns can be linked to government bonds in order to avoid these instruments eating into the bank deposit base. 
 
RBI had also demanded this, so that it could help lenders cut rates when deposit rates were lowered. This is why the centre decided to reset interest rates every quarter, which were earlier done annually. 
 The ongoing quarter has seen the average yield on government securities coming down to around 7.5%; this would have resulted in <keyword id="3248275" type="UNKNOWN" weightage="100" keywordseo="PPF-rates">PPF rates</keyword> falling to less than 8% as against the present 8.1%. 
 
However, as of now, the government has decided not to change these rates, because inflation is already troubling Indian customers. 
 
<a href="http://financialtribune.com/sites/default/files/field/image/06_Brief_0.jpg">Image source</a>

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Banks must allow retail borrowers to switch between fixed and floating rates: RBI

ANI

India’s central bank is calling on the country’s lenders to lower rates

Dilsher Dhillon

Mortgages, car loans, and credit card debt are about to get more expensive

Ben Winck

The Bank of England just hiked interest rates again, as central banks get serious about red-hot inflation

Harry Robertson

The Fed won't use negative interest rates to counteract the coronavirus recession, chairman Jerome Powell says

Ben Winck

Interest Rates Are On The Rise This Morning

Joe Weisenthal

The LIBOR is a global interest rate that affects the rates of many loans and investments. Here's how it's set, and why it's slated to end

Karen Fernandez

Interest rates for PPF might stay unchanged in the next quarter

BI India Bureau

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