State Bank of India has decided to retain only $500 million of the total Resurgent India Bonds (RIB) collection overseas. This is in contrast to the earlier plans where SBI chairman MS Verma had announced that the SBI would retain at least 25 per cent or $1 billion of the total collection of $4.216 million overseas.
"We have decided to only retain $500 million overseas because we do not foresee much demand for dollar loans," said a senior SBI official.
SBI has already brought the remaining $3.7 billion and swapped the dollars with RBI for rupees, the official said.
"We do not think we will need more than $500 million in dollar funds either for fresh external commercial borrowings (ECB) by Indian projects or for funding assets of our own international branches," the official said.
M S Verma, addressing the press conference on the day of annual general meeting after the board meeting had stated, "We shall retain 25 per cent of the RIB collection abroad.
These funds will be deployed for a temporary period for two to three months in Indian papers floated abroad or lent as external commercial borrowings to projects pending for approval."
However according to SBI officials, the bank has not invested the RIB proceeds in purchasing Indian paper aboard, instead the fund is deployed in US treasury bill and short term US money market instruments.
Meanwhile, 50 per cent of the share of the collecting banks is already disbursed today while the balance portion will be disbursed as the final collection figure is received from the registrar, said SBI officials. "The disbursement made today is based on the statements made by banks on the collection for RIB," they added.
The collecting banks have mopped up $2.5 billion and SBI would provide them 50 per cent of the collection at $1.25 billion or nearly Rs 6,000 crore.
It may be recalled that Reserve Bank of India has asked all collecting banks not use the proceeds of RIB to arbitrage between the call money market and the forex market. RBI has asked banks "to ensure that the influx of liquidity on account of RIB does not disturb the domestic markets."
While talking to reporters at a banking conference in New Delhi, Verma said State Bank of India (SBI) would tie up with Infrastructure Development Finance Corporation (IDFC) for a Rs 5,000 crore support to meet a possible repayment crisis on the Resurgent India Bonds (RIBs).
"The tie-up is a sort of insurance to meet a possible borrowing and lending mismatch arising out of RIB repayments," the SBI chairman told reporters at an international banking conference yesterday.
