Overnight Mumbai Interbank Outright Rate (MIBOR)

The Overnight Mumbai Interbank Outright Rate (MIBOR) is an Indian rupee overnight interest-rate benchmark administered by Financial Benchmarks India Private Limited (FBIL). It is calculated from eligible unsecured call-money transactions executed on the Clearing Corporation of India Limited’s (CCIL) NDS-CALL platform. MIBOR is widely used as the floating reference for Indian rupee overnight indexed swaps (OIS).

The current official name uses Outright Rate, not “Offer Rate.” MIBOR is also one overnight fixing, not a family of one-month, three-month, and six-month offered rates. A longer-period MIBOR-linked cash flow is generally derived by compounding or otherwise applying daily overnight fixings under the contract’s convention.

Key Takeaways

• FBIL administers Overnight MIBOR, and the Reserve Bank of India (RBI) has identified it as a significant benchmark.
• MIBOR is based on eligible actual trades in the unsecured overnight call-money market, not a panel poll.
• Since August 4, 2025, FBIL has used eligible transactions from the first three hours of trading, 9:00 a.m. to noon, and normally publishes the fixing by 12:45 p.m. India time.
• MIBOR is primarily an overnight derivatives benchmark; do not assume a quoted “three-month MIBOR” is an official FBIL term fixing.
• A MIBOR OIS floating leg is built from daily overnight observations, while the other leg pays a fixed rate.
• FBIL began publishing the secured overnight rupee rate SORR in July 2025. SORR and MIBOR measure different overnight markets and can coexist.
• The official methodology, eligibility rules, thresholds, fallback, and publication notices should be checked for the relevant date.

What MIBOR Measures

MIBOR measures the rate on eligible unsecured overnight rupee lending between participating institutions in India’s call-money market. “Unsecured” means the borrowing is not backed by pledged securities. The rate therefore reflects overnight liquidity and the credit characteristics of the eligible interbank market.

An overnight benchmark is an annualized rate for a very short borrowing period. It should not be interpreted as the actual return earned for one night or as the interest rate charged to every Indian borrower.

How the Calculation Works

FBIL uses eligible firm overnight trades settled on the trade date and maturing on the next applicable business day. The current methodology uses the first three hours of NDS-CALL trading. Broadly, the process:

1. selects transactions meeting the benchmark’s eligibility rules
2. applies the methodology’s transaction-size, market-volume, and trade-count criteria
3. calculates a volume-weighted mean and identifies outliers under the prescribed process
4. calculates the benchmark from the surviving eligible trades
5. extends the observation window or applies the stated fallback if minimum conditions are not met

These controls matter because a benchmark based on too few or unrepresentative transactions may not describe the intended market reliably. Users should rely on the current FBIL methodology rather than reconstructing MIBOR from a general call-money average.

MIBOR in an Overnight Indexed Swap

In a rupee OIS, one leg pays a fixed rate and the other pays a floating amount derived from overnight MIBOR observations. A simplified daily-compounding factor over an interest period is:

where (r_i) is the applicable annualized overnight MIBOR for day (i), and (d_i) is the number of calendar days for which that fixing applies. Weekend and holiday treatment follows the swap convention.

The payment is not normally determined by taking one day’s MIBOR and calling it a one-month rate. It is built from the daily path over the accrual period.

Worked Example

Assume a simplified 30-day OIS on INR 100 million:

• fixed leg rate: 5.40%
• realized annualized floating rate after applying the contract’s MIBOR compounding convention: 5.70%
• illustrative day count: 30/365

The approximate fixed-leg amount is:

The approximate floating-leg amount is:

Ignoring discounting, rounding, and other adjustments, the fixed-rate payer would receive a net amount of about INR 24,658 because the floating amount exceeded the fixed amount.

This approximation uses an already-realized annualized floating rate. An actual OIS calculation applies daily rates, day weights, holidays, compounding, payment lags, and the governing clearing or bilateral convention.

Why MIBOR Matters

MIBOR supports:

• pricing and settlement of INR overnight indexed swaps
• market expectations about the path of overnight rates and monetary policy
• hedging of short-term rupee interest-rate exposure
• valuation and risk management for MIBOR-linked derivatives
• comparison of unsecured overnight funding with secured and administered rates

The OIS curve is not the same thing as the current MIBOR fixing. OIS rates summarize market pricing for compounded overnight rates over future periods and include supply, demand, collateral, and risk-premium effects.

MIBOR Versus SORR

FBIL began publishing the Secured Overnight Rupee Rate (SORR) on July 7, 2025. SORR uses eligible basket-repo and triparty-repo transactions, while MIBOR uses unsecured call-money transactions.

The two rates can differ because they measure different markets. The launch of SORR did not automatically rewrite existing MIBOR contracts or make the rates economically interchangeable. Any transition requires product conventions, liquidity, documentation, fallback terms, and basis-risk analysis.

MIBOR, MIBID, and Term Labels

Historical market references can mention MIBID, MIBOR, or the former FIMMDA-NSE MIBID/MIBOR framework. FBIL took over administration of the current transaction-based overnight benchmark in 2015. Analysts should identify the administrator, effective date, and exact series when using historical data.

Do not infer an official FBIL term MIBOR fixing from a dealer quote, curve point, or compounded OIS rate. A term-market indication can be useful, but it is not automatically the same benchmark as Overnight MIBOR.

Risks and Common Mistakes

• Compounding risk: Incorrect daily weights, holidays, or observation dates can change the floating payment.
• Basis risk: MIBOR, SORR, the RBI policy repo rate, and other rupee benchmarks can diverge.
• Market-depth risk: Benchmark robustness depends on eligible transaction activity in the observation window.
• Fallback risk: The methodology can extend the window or use a fallback when thresholds are not met.
• Operational risk: Using a preliminary, revised, stale, or wrong-date fixing can misstate settlement.
• Curve risk: A current fixing should not be substituted for the full OIS curve in valuation.
• Documentation risk: Cleared and bilateral swaps can have different compounding, payment, and disruption provisions.
• Naming risk: “Offer Rate” and unofficial term labels can point users to the wrong series.

How to Evaluate MIBOR Exposure

1. Confirm that the instrument references FBIL Overnight MIBOR and identify its governing definitions.
2. Obtain the official fixing for each required Mumbai business day.
3. Reproduce the daily compounding, holiday weights, rounding, and payment lag.
4. Reconcile fixed and floating legs, notional changes, settlement currency, and discounting.
5. Review disruption, revision, fallback, and benchmark-change provisions.
6. Compare MIBOR exposure with SORR, repo, or policy-rate hedges for basis risk.
7. Use current FBIL methodology and notices because observation and publication rules can change.

Official Sources

• Financial Benchmarks India: Official benchmark publication publishes Overnight MIBOR and other FBIL benchmarks.
• FBIL: August 2025 MIBOR observation-window change confirms use of the first three trading hours and 12:45 p.m. publication from August 4, 2025.
• Reserve Bank of India: Committee on the MIBOR Benchmark explains MIBOR’s transaction basis, OIS role, methodology review, and SORR recommendation.
• RBI: Significant benchmark list identifies Overnight MIBOR among FBIL-administered significant benchmarks.
• FBIL: SORR publication announcement describes the July 2025 launch and secured transaction sources.

Related Terms

• Overnight Indexed Swap (OIS): The principal derivative structure that compounds MIBOR on its floating leg.
• Overnight Rate: A benchmark or market rate for borrowing until the next applicable business day.
• Interbank Rate: The broader category of bank-to-bank funding rates.
• Benchmark Rate: A standardized reference used for pricing and settlement.
• Basis Point: The standard unit for comparing MIBOR, OIS, and policy-rate changes.
• Interest Rate Swap: The broader derivative family containing overnight indexed swaps.

FAQs

This article provides general financial education, not personalized investment, trading, borrowing, accounting, tax, or legal advice. Current FBIL methodology and the governing transaction documents control an actual MIBOR-linked payment.