India is revamping a key funding market, echoing the global shift away from Libor, as banks cede influence over daily borrowing costs.

The nation’s financial benchmark administrator and the central bank are phasing in the Secured Overnight Rupee Rate, or SORR, to eventually replace the Mumbai Interbank Outright Rate — a gauge long used by institutions to set the rates on products from bank deposits and swaps to some consumer loans.

Mibor underpins almost $1 trillion in interest-rate swaps, yet it’s built on a tiny base of unsecured bank trades that make up about 2% of India’s funding market. With global investors taking up a bigger slice of the nation’s assets, demand for a gauge that better captures borrowing and hedging costs has grown. So, the authorities are rebuilding the system’s p

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