The Telegraph
Since 1st March, 1999
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No jitters on Resurgent India bonds

Mumbai, July 11: The Reserve Bank of India (RBI) today tried to squelch fears that redeeming Resurgent India Bonds (RIB) in October will deplete the forex cushion.

In all, $ 5.5 billion has to be paid to investors, including interest, for bonds that were floated by State Bank of India (SBI) and raised $ 4.2 billion in 1998. The RBI said it would sell foreign currency to SBI for the payment.

The Reserve Bank said returning RIB investors their money will not crimp the $ 4,186 million ($ 4.2 billion) it held in forward foreign currency assets on May 31.

SBI also has adequate rupee resources to fund foreign currency purchases. If more is needed, regular reverse-repurchase facilities can be tapped to raise cash for RIBs.

Also, the balance in the maintenance of value (MoV) account is more than adequate to cover the exchange loss on account of rupee depreciation so far. This account, kept with the RBI, is used to fund periodic contributions from SBI and the Centre to cover changes arising from the exchange rate of the rupee. RBI felt the recent rupee surge would leave a surplus here.

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