Mibor is better at tracking loans than Libor

A comparison of Mibor movements with interest rates in the call money market suggests that they as a general rule move in tandem. What is more, the gap between the two is very small.

But borrowings happen throughout the day with the bulk of them concentrated in the morning, says Mr Rajat Monga, CFO & President Financial Markets, YES Bank.

When asked about such anomalies Mr Monga said, “If right away a bank receives an unexpected cash inflow at 2 pm. It has the option of parking it in the reverse repo window at a low rate or lending it at in the call money market”. This leads to call rates fleetingly spiking above the Mibor.