Apart from this, it also called for amending the statutes to empower RBI to determine the policy for benchmarks and issuing binding directions to all the agencies involved in the benchmark-setting process.
These suggestions are made in a ‘Draft report of the committee on financial benchmarks’ and sought public comments on the report by January 17, 2014.
The RBI had set up a committee under its Executive Director P Vijaya Bhaskar on June 28, 2013 with a mandate to study the various issues relating to financial benchmarks and to submit the report by December 31.
The panel was set up in the aftermath of revelations that several key global benchmark rates like the Libor, Euribor of European Union, Tibor of Tokyo, etc were rigged by leading market operators like RBS, and several global standard setting bodies, national regulators.
This led to self-regulatory bodies reviewing the benchmark setting processes and coming out with wide ranging reforms to enhance the robustness and reliability of financial benchmarks.The RBI draft report, while noting that the existing system is generally satisfactory, called for “several measures/principles to strengthen the benchmark quality, setting methodology and governance framework of the benchmark administrators, calculation agents and submitters.”
It also called for “amendments to the RBI Act, as a long- term measure, to explicitly empower RBI to determine the policy with regard to benchmarks used in money, G-secs, credit and forex markets and to issue binding directions to all the agencies involved in the benchmark-setting.