ICICI Bank Executes Secured Overnight Financing Rate-Linked Transactions

Edited by Prashun Talukdar

07 Oct 2021, 05:54 PM IST

In January, ICICI had executed its first interbank money market transaction linked to SOFR.

New Delhi: Private lender ICICI Bank on Thursday announced that it has executed its first term loan and cross currency swap derivative transactions linked to Secured Overnight Financing Rate (SOFR).

The transactions were carried out with a corporate client through the bank's international offices. ICICI Bank said that these transactions indicate its preparedness towards smooth transition from US Dollar LIBOR (London Interbank Offered Rate) to transactions linked to Alternative Reference Rates (ARR).

Earlier in January, ICICI had executed its first interbank money market transaction linked to SOFR, which has been identified as the replacement for USD LIBOR.

Anuj Bhargava, Head - Global Clients Group, ICICI Bank said, "The lender has been actively working with its clients for seamless transition from LIBOR to ARRs. These transactions are just the start of the move towards the ARRs."

B Prasanna, ICICI Bank's Group Head - Global Markets, Sales, Trading and Research, said, "With the slew of measures announced by regulators globally, there is an increased shift towards ARR linked products in markets. As the cessation deadline approaches, the liquidity in ARR linked products will increase and ICICI Bank is ready to widen its product suite to meet the customer requirements."

The Reserve Bank of India (RBI) had, in August last year, requested banks to frame a Board-approved plan, outlining an assessment of exposures linked to the LIBOR and the steps to be taken to address risks arising from the cessation, including preparation for the adoption of the ARR.

SOFR is linked to US treasury market transactions. Libor is expected to be phased out at the end of 2021.

Contactless Payment Solution Via ICICI Bank's App

In a separate development, the lender on Wednesday had launched a contactless payment service through its banking app, iMobile Pay, that enables customers to tap their smartphones to pay at POS (Point of Sale) machines of merchant outlets. "The service offers improved convenience to over 1.5 crore debit and credit card customers of the Bank as they will no longer need to carry their cards for payments at retail stores," ICICI Bank had said.

The facility of 'Tap to Pay' through iMobile Pay is now available on Visa cards and it will soon be activated on Mastercard cards too, it had stated.

The bank further mentioned that for transactions above Rs 5,000, customers will have to enter their card PIN (Personal Identification Number) along with waving the phone near the POS device.