| Purwar: A new money-spinner
Mumbai, July 17: State Bank of India (SBI) believes 30-35 per cent of the redemptions in Resurgent India Bonds (RIB) will flow into a new scheme it plans for NRIs.
The bank had raised $ 4.2 billion in 1998 through RIBs, but will pay $ 5.5 billion when they mature in October.
Speaking to reporters here today after inaugurating the country’s first offshore banking unit, chairman A. K. Purwar said the bank hopes to retain 30-35 per cent of the money from RIBs —around $ 2 billion.
He said the new deposit scheme will be finalised in two to three weeks, and that it will have an in-built mechanism to manage exchange-rate risks. The idea of targeting RIB holders through a new product was based on a purely “commercial consideration”.
While the exchange rate risk on RIBs was borne by the Centre, Purwar said this time around, the bank was not looking for guarantees from the government.
“The SBI will stand on its own. It will not look for guarantees from the government,” he said, adding the planned deposit scheme will take in dollars and rupees. Purwar refused to be drawn on the size, but said road-shows for it are expected to commence next month.
Ruling out an adverse impact of RIB redemptions on State Bank or on the forex and money markets, the SBI chief said the bank was “strong enough and well prepared”.
Purwar said the government is considering a proposal to raise the foreign institutional investor (FII) stake limit. The comment sent the SBI share to a 52-week high in intra-day deals on stock exchanges today.