Lifetime FREE Credit Card with 10X rewards
Most Searched
Top Products
Popular Searches
Bank Accounts
Populer FAQs
Signature is important and it is required to avail various products and services. To upload your signature
1. Go to More
2. Select Customer Service Dashboard
3. Select ‘Savings/Current Accounts’
4. Select ‘Upload Signature’ to upload your signature.
That's easy! Follow these steps to track your service requests:
1. From the home page of the app, tap on "Customer Service" section
2. Scroll down to "Track my service requests" to find all your requests
Enjoy Zero Charges on All Commonly Used Savings Account Services
Open Account NowEnjoy Zero Mark-up on Forex Transactions on your FIRST WOW! Credit Card
Apply NowCompanies need funds to expand and grow their business. They usually acquire money from banks, which charge interest at a rate that depends on many factors. It can increase as well as decrease, which isn't ideal for all companies. An interest rate swap helps companies customise their interest rate based on a specified principal amount.
It commonly involves an exchange between fixed to floating interest rates or vice versa and helps marginally reduce companies' borrowing costs. This article gives an insight into the interest rate swap, its benefits, and its types.
Interest rate swap helps institutions manage their risks due to fluctuation in the interest rates. It is a contract between stakeholders where interest payments are exchanged according to their needs.
It involves an exchange of a floating interest rate for a fixed rate or vice versa. Swaps help marginally lower the interest rates that need to be paid or reduce/increase the exposure to fluctuating interest rates. OIS (Overnight Index Swap) is amongst the most popular benchmark swaps due to its liquidity.
Interest rate swaps are used to exchange cash flow to minimise losses due to fluctuating interest rates. Since most transactions are performed over the counter, an interest rate swap helps the involved parties customise their contracts as per the desired specification.
In India, the MIBOR (Mumbai Interbank Offered Rate) is the floating benchmark against which the companies settle their swaps.
Here are three different types of interest rate swaps.
The swap rate is the fixed interest rate demanded by the receiver against the uncertainties of paying short-term MIBOR floating rates. At the time of the swap agreement, the entire fixed rate flow remains equal to the forecasted floating-rate payment as depicted by the forward MIBOR curve. Swap rates are usually quoted in fixed-rate or swap spread. The swap spread is the difference between the swap rate and the government's bond yield during similar maturity.
When the swap contract is established, the total amount of fixed interest rate is considered equal to the forecasted floating interest rate cash flow. However, the floating interest rates fluctuate and can eventually incur losses to the cash flow receiver. If the interest rate swap becomes unprofitable, the counterparty can exchange countervailing swaps for shedding the interest rate risk of the swap.
For investors and corporate treasurers, interest rate swaps are an essential financial tool. Following are the ways to invest in interest rate swaps.
Interest rate swap helps corporates and investors minimise interest rate risks. By swapping fixed and floating interest rates, risk managers can make profitable deals while maintaining optimal cash flow per the company's requirements. Interest rate swapping can also offer opportunities for low liquidity fixed-income investments.
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.