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August 25, 1998

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RIB-happy SBI plans overseas expansion and foreign currency loans to FIs

A total sum of $ 4.16 billion has been collected from non-resident Indians and overseas corporate bodies by India's premier bank, State Bank of India, through its foreign currency denominated Resurgent India Bonds in the last 16 working days of subscriptions worldwide.

Speaking at the close of subscription, a jubilant SBI chairman Maya Shankar Verma told mediapersons in Bombay today that the response was ''unprecedented'' and really ''enormous'' from the NRIs who once again demonstrated their faith and confidence in Indian economy and were willing to contribute their mite to infrastructure development projects.

''Our strategy to spell out clearly the end-use of funds such as financing the infrastructure projects had attracted 74,300 applications from every single concentration of Indians across the globe,'' Verma said.

While the response from the USA and Europe was around 30 per cent, 70 per cent of the applications came from NRIs in the Middle East and South-East Asia, he said. This reflects the fact that such huge borrowings can be made by India, whose sovereign rating was downgraded by agencies like Moody's, without the help of western world. The issue was well timed with properly priced, he said.

Verma disclosed that SBI would initially park about $ 1 billion abroad in order to help the Indian corporates in foreign currency borrowings and to lower the benchmarking of lendings by others in rupee as well as external currencies for infrastructural development.

The funds would significantly improve the international perception of India at a time when it is facing rating problems in overseas markets and nuclear explosions-related sanctions by the US.

Verma said that such a big size of funds would enable the bank to expand its operations abroad and add about $ 1 billion to its balance sheet. It also helped the bank to increase its asset base in the current year at a faster pace and in next four years time, the bank has plans to double its present balance sheet footing to over Rs 150 billion.

SBI will be directly lending foreign currency loans to not only its clients but to the clients of other banks and financial institutions, depending on the needs of borrowers. ''We will also allow our collecting banks numbering 46 to retain the funds they had collected through RIBs for SBI and deploy its profitability to give a reasonable return to SBI.

''SBI would also invest in government securities so that in turn the government could directly lend funds towards infrastructure and social development projects.

''We will chalk out various deployment strategies for RIB funds in the next four to five weeks,'' Verma said and added that the SBI would shortly come with certain schemes for investment in infrastructure development projects.

UNI

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