'SBI to benefit from IMD redemption'

State Bank of India chairman A K Purwar today said the bank would benefit from India Millennium Deposit (IMD) redemption in medium and long term.

"The bank would gain positively from the IMD redemption as the cost of funds was higher that time than the current market conditions," said Purwar on Tuesday.

SBI had issued the bonds to raise $5.5 million in 2000, and the bank would be paying the amount on time, Purwar said. "We would be paying the entire amount on time and the bank is slated to benefit from the IMD redemption in the medium and long term," he said.

Purwar was here to inaugurate the core banking solution in the State Bank of Saurashtra. Replying to a question, Purwar said the bank would aggressively target to tap the money that NRIs would get from the forthcoming redemption of imd through its existing reinvestment schemes.

"We expect to tap almost 15 per cent of the money," said Purwar. The bank would continue to raise funds from the domestic market as usual, but for IMD redemption it was not required, he said. The bank has raised close to Rs 3,200 crore from the domestic market this financial year so far, he said.

The $7.3 million IMD redemption, comprising principal and interests, is due on December 29. The five-year bonds carry interest rates of 8.5 per cent, 7.85 per cent and 6.85 per cent per annum in dollars, pound sterling and euro, respectively. The depositor has the option of receiving the interest half yearly or on a cumulative basis on maturity.

The Reserve Bank had stated earlier that it would release the money for redemption of IMD from its foreign exchange reserves, but SBI would have to provide rupee funds Rs 33,000 crore in return.

The five-year bonds carry interest rates of 8.5 per cent, 7.85 per cent and 6.85 per cent per annum in dollars, pound sterling and euro, respectively.

The depositor has the option of receiving the interest half yearly or on a cumulative basis on maturity. Reserve bank had stated that it would release money for redemption of IMD from its foreign exchange reserves to SBI but the later had to provide rupee funds of nearly Rs 33,000 crore in return.