Generally Whenever the bank offers loan to other banks,the interest may vary from one bank to another bank.but these interest rates does not differ much.
LIBOR – Which stands for London Inter Bank Offered Rate, LIBOR which is started in 1986 for three currencies that is USB, GBP and JPY.
which calculates the total amount of interest to pay for the loan in that best four and the worst 4, calculates the average of the remaining 8 is the value of LIBOR.
Which is use full in terms of financial institutions for deciding interest rates for the different financial instruments like deposited amount,Loans of different maturitie and interest rates .
MIBOR – Stands for Mumbai Inter Bank Offered Rate. which is started in 1998.
They are having two calculating agents.Reuters and National Stock Exchange(NSE) , NSE is the more popular of the two, which is based on rates given by NSE of 31 banks or institutions dealers.
Which is also use full in terms of financial institutions for deciding interest rates for the different financial instruments like deposited amount,Loans of different maturitie and which is also usefull for short term loan users.
MIBOR is basically calculated as per the data collected from the Panel of 30 banks and the dealers. Later MIBOR rates are then calculated by a combination of two methods—polling and bootstrapping.
In India MIBOR rates are decided based on the combination of both polling and bootstrapping. In polling method few participants are asked to give their reference rates and from that rates MIBOR rates are computed. Bootstrapping is a statistical way of arriving to MIBOR rates which is truly unbiased. As polling will often leads to biased noisy reference rate, a combination both polling and bootstrapping is preferred.