Introduction

• The Mumbai Interbank Offered Rate (MIBOR) is the rate of interest charged by a bank on a short-term loan to another bank in India. 
• MIBOR is used in conjunction with the Mumbai interbank bid and forward rates (MIBID and MIFOR) by the central bank of India to set short-term monetary policy.
• As India’s financial markets have continued to develop, India felt it needed a reference rate for its debt market, which led to the development and introduction of the MIBOR. 

Features of MIBOR

• MIBOR is the rate at which overnight lending is made by Commercial banks in India.
• This is the interest rate at which banks can borrow funds from other banks in the Indian interbank market.
• MIBOR is calculated based on input from a panel of 30 banks and primary dealers.
• MIBOR serves the purpose of maintaining the legal reserve requirement.
• MIBOR is calculated every day by the National Stock Exchange of India (NSEIL).
• It is used currently for forward contracts and floating-rate debentures. 

MIBOR Vs. MIBID

• MIBID is the interest rate that one participating bank would pay another to attract the deposit of funds. MIBID rate would be lower than the interest rate offered at MIBOR. 
• Together, the MIBID and MIBOR constitute a bid-offer spread for Indian overnight lending rates.