**Summary:**
RBI Circular No. 13, A.P. DIR Series, dated September 28, 2021, issued by the Reserve Bank of India (RBI), addresses the use of alternative reference rates in place of LIBOR (London Interbank Offered Rate) for interest payable on export-import transactions. This circular, directed to all Category-I Authorised Dealer (AD) banks, acknowledges the impending cessation of LIBOR as a benchmark rate. The RBI now permits AD banks to use any other widely accepted alternative reference rate in the relevant currency for these transactions, as opposed to being strictly LIBOR-linked as previously directed under Regulation 15 of Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, notified vide FEMA 23(R)/2015-RB dated January 12, 2016. Notification No. FEMA 23(R)/5-2021-RB dated September 08, 2021 provides the necessary amendment to FEMA 23(R)/2015-RB. All other existing instructions pertaining to export-import transactions remain unchanged. The directions are issued under Section 10(4) and Section 11(1) of the FEMA, 1999 (42 of 1999). AD banks are instructed to bring this circular to the attention of their constituents. R.S. Amar, Chief General Manager, is the contact person.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking system.
Mumbai, Maharashtra: The city in India where the Reserve Bank of India is located; it is also where this circular was issued from.
Authorised Dealer Category I banks: Banks authorized by the Reserve Bank of India to deal in foreign exchange.
LIBOR: London Inter-Bank Offered Rate; a benchmark interest rate that is being phased out.
Foreign Exchange Management Act, 1999: An act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Foreign Exchange Management (Export of Goods & Services) Regulations, 2015: Regulations related to the export of goods and services under the Foreign Exchange Management Act.
FEMA 23R/2015-RB: Notification issued by the Reserve Bank of India related to Foreign Exchange Management Regulations.
Alternative Reference Rate: A benchmark rate that can be used in place of LIBOR for interest payable in respect of export-import transactions.
भारतीय �रज़व र् बक� /RESERVE BANK OF INDIA
मबुं ई/ MUMBAI – 400 001
RBI/2021-2022/101
A.P. (DIR Series) Circular No.13 September 28, 2021
To
All Category-I Authorised Dealer Banks
Use of any Alternative reference rate in place of LIBOR for interest payable in
respect of export / import transactions
Attention of Authorised Dealer Category– I banks (AD banks) is invited to extant
Regulation 15 of Foreign Exchange Management (Export of Goods & Services)
Regulations, 2015 notified vide FEMA 23(R)/2015-RB dated January 12, 2016 and
various directions issued to AD banks from time to time prescribing LIBOR linked
interest payable in respect of export/import transactions.
2. In view of the impending cessation of LIBOR as a benchmark rate, it has been
decided to permit AD banks to use any other widely accepted/Alternative reference rate
in the currency concerned for such transactions. All other instructions in this regard shall
remain unchanged. The necessary enabling amendment to FEMA 23(R)/2015-RB has
since been notified vide Notification No. FEMA 23(R)/(5)/2021-RB dated September 08,
2021 (copy enclosed).
3. AD banks may bring the contents of this circular to the notice of their constituents
concerned.
4. The directions contained in this circular have been issued under Section 10(4) and
Section 11(1) of the FEMA, 1999 (42 of 1999) and are without prejudice to permissions
/ approvals, if any, required under any other law.
Yours faithfully,
(R. S. Amar)
Chief General Manager