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Detailed explanation-1: -With this transaction, Axis Bank said it has paved the way for other Indian banks to advance in the LIBOR transition phase. Going live with SOFR-linked transactions will instil huge comfort among various corporate clients of the bank, involved in a gamut of overseas loan and trade financing transactions, it said.

Detailed explanation-2: -Notes: State Bank of India (SBI) has recently executed two inter-bank money market deals with pricing linked to SOFR (Secured Overnight Financing Rate). SOFR is a replacement for London Inter-bank Offered Rate (LIBOR), which is global reference rate for unsecured short-term borrowing in the interbank market.

Detailed explanation-3: -In 2022, the LIBOR Act passed by the U.S. Congress established SOFR as a default replacement rate for LIBOR contracts that lack mechanisms to deal with LIBOR’s cessation. The Act also grants a safe harbor to LIBOR contracts that transition to SOFR.

Detailed explanation-4: -History of the Secured Overnight Financing Rate (SOFR) Since its inception in the mid-1980s, the LIBOR has been the go-to interest rate to which investors and banks peg their credit agreements.

Detailed explanation-5: -The Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.