Goodbye MIBOR, Hello SORR: Understanding RBI’s New Interest Rate Benchmark 04Oct2025
Abbreviations used:
FBIL Financial Benchmarks India Pvt Ltd
LIBOR London Interbank Offered Rate
MIBOR Mumbai Interbank Offered Rate
RBI Reserve Bank of India
SORR Secured Overnight Rupee Rate
SOFR Secured Overnight Financing Rate (the US)
TREPS Triparty or Tri-party Repos
The Reserve Bank of India has introduced a new interest rate benchmark called SORR, which stands for Secured Overnight Rupee Rate. While it may seem like a technical change, this shift could have a big impact on the way India’s financial system works.
1. What is SORR?
SORR is based on actual overnight borrowing transactions that happen in India’s secured money markets. In these markets, institutions borrow money overnight using government bonds or other approved securities as collateral.
The rate at which they borrow is what SORR will track. This will make it a reliable indicator of the real cost of short-term funds in India's financial system.
2. Why Was SORR Introduced?
As of now, India has been using a benchmark called MIBOR, or Mumbai Interbank Offered Rate. MIBOR is based on trades in call money market which comprises just banks and primarily dealers.
However, this market represents only a small portion of overnight borrowing in India. Because MIBOR is based on low-volume call money market, it has been considered less representative of true market activity.
Any benchmark interest rate should be reflective of current market dynamics. A committee set up by RBI recommended an alternative benchmark, called SORR. The committee's recommendations were made public in Oct2024.
The RBI committee on MIBOR Benchmark suggested FBIL or Financial Benchmarks India Pvt Ltd might develop a benchmark based on the secured money market (both market repo and TREP), that is, a Secured Overnight Rupee Rate (SORR).
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3. Why the need for SORR?
Post-LIBOR, there have been several changes in global funding markets. The US has introduced SOFR or Secured Overnight Financing Rate to replace the discredited LIBOR benchmark.
SOFR indicates the cost of overnight borrowing in the US and is collateralised by the US treasury securities.
Likewise, Switzerland introduced SARON or Swiss Average Rate Overnight to replace Swiss franc LIBOR.
SARON is a transaction-based overnight interest rate benchmark based on actual repo transactions secured by Swiss government bonds.
Bank of England administers SONIA (Sterling Overnight Index Average) as the UK’s official benchmark interest rate for sterling (GBP) markets. The UK wound down the LIBOR completely from Oct2024.
These moves by the US, the UK and Switzerland are part of a global shift where many countries are replacing LIBOR with new, transaction-based benchmarks to improve market integrity and stability.
India is following international best practices by moving away from the MIBOR benchmark, which is based on unsecured call money markets, toward SORR — a new benchmark grounded in secured overnight lending transactions.
This shift aims to enhance transparency, accuracy and credibility by reflecting real market activity, just as other countries have done by replacing LIBOR with secured, transaction-based rates like SOFR in the US and SARON in Switzerland.
4. How Is SORR Different from MIBOR?
Unlike MIBOR, the Secured Overnight Rupee Rate (SORR) is based on actual transactions in the secured overnight market—specifically, the market repo and tri-party repo (TREPS) segments.
These two together account for approximately 98 per cent of overnight money market volumes in India, making SORR a far more representative and reliable indicator of the true cost of overnight borrowing.
Why SORR Is More Trustworthy and Inclusive?
MIBOR is derived from the call money market, which now contributes just 2 per cent to overnight market volumes (FY 2024-25).
In contrast, SORR reflects activity in the far more active and diverse secured markets, involving a broad spectrum of participants including banks, mutual funds, insurance companies, corporates and other financial institutions.
Over time, there has been a clear market shift from unsecured to secured lending, as participants increasingly prefer the safety and liquidity of repos. This shift underlines the relevance of SORR as a benchmark rooted in current market dynamics.
How SORR Is Calculated?
SORR is based on actual trades conducted during the first three hours of the trading day in:
Basket Repo: A type of repurchase agreement where borrowing is backed by a predefined "basket" of eligible government securities rather than a single specific security, allowing flexibility and ensuring high-quality collateral.
TREPS (Tri-party Repos): A secured market segment dominated by mutual funds on the lending side. Mutual funds compete directly with banks for household and corporate surpluses.
This methodology contrasts with MIBOR, which is calculated as the volume-weighted average rate of trades in the first hour of the call money market, an unsecured segment.
Regulatory Backing and Future Outlook
SORR has been developed by Financial Benchmarks India Pvt Ltd (FBIL) under the guidance of the RBI. Given its secured market base and broader participation, SORR is expected to be a more accurate barometer of overnight interest rates going forward.
Importantly, SORR is also likely to play an increasing role in interest rate derivatives markets such as:
> Overnight Index Swaps (OIS)
> Forward Rate Agreements (FRAs)
> MIBOR-based Total Return Swaps (TRS)
FBIL currently publishes data on both overnight MIBOR as well as SORR.
Table showing comparison of MIBOR and SORR >
Click on the image to view better >
To better understand the shift from MIBOR to SORR, the table aabove compares key features of both benchmarks. It clearly shows how SORR, with its secured and more liquid market base, offers better transparency, lower volatility and broader market participation.
As shown above, SORR is derived from a significantly larger share of the overnight market (98% vs. 2%) and involves a wider range of participants. This makes it more reflective of actual borrowing costs across the financial system.
Moreover, because it's based on collateralised transactions, SORR offers lower volatility and better alignment with monetary policy transmission.
5. Does It Affect You?
For most ordinary people, SORR will not make a noticeable difference right away. Home loan EMIs, personal loans and fixed deposit rates are not directly linked to this new benchmark.
However, in the background, financial institutions, bond markets and derivative markets rely on these reference rates to price products and manage risks. A more accurate and stable benchmark can indirectly lead to fairer pricing and greater market stability over time.
Question: Will my home loan EMI change?
Answer: Not directly. Most consumer loans are not
yet linked to SORR.
Q: Who
sets SORR?
A: It is calculated by FBIL based on
actual market repo and TREPS trades.
6. When Will SORR Replace MIBOR?
As of now, the RBI has not announced a specific date when SORR will replace the existing overnight MIBOR. The transition from MIBOR to SORR will be gradual, allowing markets and institutions time to adjust.
Financial Benchmarks India Ltd (FBIL) is responsible for developing and implementing SORR. During this period, both MIBOR and SORR will coexist.
7. Current status of SORR
FBIL started publishing the new risk-free SORR benchmark rate, on its website, effective from 07Jul2025. However, it stopped publishing the data publicly from 01Oct2025 -- meaning the data are now available only to paid subscribers.
As suggested by the RBI Committee on MIBOR Benchmark, participants have been using, as per their preference, both interest benchmarks, namely, SORR and overnight MIBOR for their market transactions.
8. Why Does It Matter in the Bigger Picture?
This move is part of a larger global trend. Countries around the world have been moving away from older, less reliable benchmarks such as LIBOR and replacing them with new rates like SOFR in the United States.
These new benchmarks are typically based on secured, transaction-based data, making them more transparent and robust. India is now following a similar path with SORR.
9. Summary
While SORR may not impact your daily life immediately, it marks a quiet yet meaningful shift in how India’s financial system operates. By relying on real, secured market transactions, SORR introduces a more credible and transparent benchmark for overnight interest rates.
This transition lays a stronger foundation for future financial products, investment decisions and economic policymaking—improving trust in the system over time.
Notably, with Indian government bonds recently included in global benchmark indices such as those by Bloomberg and JP Morgan, the adoption of a robust and transparent rate like SORR becomes even more relevant. It provides foreign investors with a more accurate and dependable measure of short-term funding costs.
Though the change won't happen overnight, it reflects a broader move toward a more resilient, inclusive and market-focused financial framework.
SORR represents a major evolution in India's benchmark rates. As the market increasingly favors secured lending, SORR is well-positioned to become the primary reference rate for overnight funding and short-term liquidity management in India.
If you're curious to learn more, you can look up the RBI’s monetary policy statement from December 2024 or visit the FBIL website, where updates on SORR’s development are being published.
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References:
RBI Report of the Committee on MIBOR Benchmark 01Oct2024
RBI governor's statement on SORR introduction 06Dec2024
RBI Monetary Policy Report Apr2025: Table IV:3 (page 66) Average Volume and share in overnight money market - call money market 2%; Market Repo 28% and Triparty Repo 70% share
RBI press release on Revised Liquidity Management Framework 30Sep2025 - Overnight WACR will continue to be the operating target of RBI's monetary policy; LAF corridor of SDF and MSF, LAF policy repo rate, 7-day VRR/VRRR, CRR, etc.
RBI Determinants of Uncollateralised Money Market Volumes 23Jul2025 - call money, TREP, primary dealers, mutual funds, government flows, USD-INR forward premia, etc.
FBIL Methodology document for SORR
FBIL pricing of SORR data
FBIL SORR data from 01Sep2025 to 30Sep2025:
Disclosure: I've got a vested interest in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and
opinion provided here are only for information purposes and should not be construed
as investment advice. Investors should consult their own financial advisers
before making any investments. The author is a CFA Charterholder with a vested
interest in financial markets.
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