State Bank of India (SBI) expects to retain 30-35 per cent of the $5.5 billion redemption proceeds of the Resurgent India Bonds (RIBs) despite the cap on interest rates on non-resident external (NRE) rupee deposits imposed by the Reserve Bank of India (RBI) today.
The bank will come out with the details of the special deposit scheme, which is being designed so that the RIB redemption proceeds can be ploughed back by the overseas Indians, early next week and roadshows for marketing the same will be kicked off in August/September.
SBI had raised close to $4 billion in the August-September 1998 period via the quasi-sovereign debt, which had a tenor of five years.
Also Read
At zero currency risk and near zero credit risk, the bonds offered much higher coupons than otherwise available on comparable instruments. They mature in October 2003.
The government hit upon the RIBs to shore up its external account in the backdrop of the uncertainty in the wake of the Pokhran sanctions in 1998.
SBI plans to devise the new deposit scheme in such a way that it will have an in-built mechanism to take care of the exchange rate risk. The new scheme will be denominated in rupees as well as dollars.