Reserve Bank of India (Financial Benchmark Administrators) Directions, 2023

1. Applies to benchmark administrators

This rule covers companies that administer financial benchmarks under RBI's law.

2. Significant benchmark defined

A benchmark becomes 'significant' only when RBI itself names it so.

3. No unauthorised benchmark administration

No one may run a benchmark under this rule without RBI's own permission.

4. Must be an Indian company

An FBA must be a company set up in India.

5. ₹5 crore net worth floor

A significant-benchmark administrator needs at least ₹5 crore net worth, at all times.

BankPulse example. An FBA administers a significant benchmark. It must always hold at least ₹5 crore of net worth, not only on the day it applies.

6. ₹1 crore for non-significant

A non-significant benchmark administrator needs at least ₹1 crore net worth at all times.

7. Authorisation needed to administer

No FBA may run a benchmark without first getting RBI's authorisation.

8. Three months to apply

An FBA already running a benchmark must apply for authorisation within three months.

BankPulse example. An FBA was already running a benchmark the day these rules began. It has three months from that day to apply for authorisation, or it must stop.

9. Must stop within three months

An FBA running only a non-significant benchmark, and not seeking approval, must stop within three months.

10. Upgrade needs fresh approval

If RBI upgrades a benchmark to 'significant', its administrator must apply again within three months.

11. Authorisation cannot be transferred

An FBA's authorisation is for named benchmarks only and cannot be passed to anyone else.

12. Methodology must be published

Every significant-benchmark administrator must publish its full methodology on its own website.

13. 15 days' notice for changes

A methodology change must be announced at least 15 days before it takes effect.

BankPulse example. An FBA wants a methodology change to take effect in the middle of next month. It must announce the change at least 15 days beforehand.

14. Oversight Committee required

Every significant-benchmark administrator must set up its own Oversight Committee.

15. Five-year limit on members

No one may sit on the Oversight Committee for more than five years, however many terms.

BankPulse example. A person serves two two-year terms and then a one-year term on the Oversight Committee. That is five years total; a sixth year is not allowed.

16. Data must stay in India

All data used to calculate a significant benchmark must be stored only on systems inside India.

17. Whistleblower policy required

Every significant-benchmark administrator must run its own whistleblower system.

18. Five-year record retention

Every written record about a benchmark must be kept for five years and shown to RBI on demand.

19. Ten-year data preservation

Benchmark data itself must be kept for ten years, longer than the record-retention rule above.

BankPulse example. An FBA creates data for a significant benchmark today. It must keep that data for at least ten years from today.

20. Litigation data held two years

Data tied to a court case must be kept for two years after the case fully ends.

21. Benchmarks published within 15 days

A significant benchmark must be made public the same day, or at most 15 days later.

22. Non-significant needs a methodology

Even a non-significant benchmark administrator must document and publish its methodology.

23. Non-significant reviewed yearly

A non-significant benchmark's methodology must be reviewed at least once a year.

24. Shorter data rule: non-significant

Non-significant benchmark data is kept for only three years, a shorter period than significant benchmarks get.

25. RBI may inspect or audit

RBI can inspect an FBA on site or order a special audit at any time.

26. Reports due on RBI's schedule

Every FBA must send RBI the data and reports RBI asks for, on RBI's own timetable.

27. RBI can revoke authorisation

RBI can cancel an FBA's authorisation for a serious violation, but must first let it defend itself.

28. Surrender the authorisation letter

A revoked FBA must hand back its original authorisation letter to RBI.

29. RBI's approval needed to stop

An FBA cannot simply stop running a benchmark; it needs RBI's prior approval first.

30. Written termination policy needed

Every significant-benchmark administrator needs a written policy for how it would end a benchmark.

1. Called the 2023 Directions

This rulebook is the 2023 Directions on financial benchmark administrators.

2. Internal benchmarks are excluded

A benchmark a company uses only inside itself, for its own pricing, is not covered.

3. Old 2019 authorisations carry over

Any approval given under the old 2019 rules counts as given under these new rules.

4. Effective immediately

The rule started the day RBI issued it.

5. What a benchmark is

A benchmark is a rate, price or index used as a reference to price or value financial products.

6. What an FBA is

An FBA is a company that creates, runs and administers a benchmark.

7. Non-significant benchmark defined

Every other benchmark, not named significant by RBI, is 'non-significant'.

8. What a submitter is

A submitter is any person who feeds data into a benchmark's calculation.

9. RBI decides what is significant

RBI alone decides which benchmark counts as significant, based on how much it is used.

10. RBI's decision is final

RBI's choice to grant or refuse authorisation cannot be appealed.

11. RBI can raise the bar

RBI may force a non-significant administrator to follow the tougher significant-benchmark rules.

12. RBI can grant exemptions

RBI may excuse an FBA from any part of these rules if it decides that's needed.