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IMD mobilisations exceed $4.5 billion

NetScribes/Janaki Krishnan

Mobilisations from State Bank of India's India Millennium Deposits programme exceeded $4.5 billion at the close of the issue on Monday, according to preliminary estimates made by SBI Caps.

"It will take us some time to calculate the exact figure, but we can say that we have exceeded the $4.5 billion mark," Birendra Kumar, managing director of SBI Caps, told NetScribes.

At the time of launching the programme, the then SBI chairman, G G Vaidya, had said IMD could raise $5 billion against a targeted $2 billion. SBI sources say that once the final collections are in, the figure would be close to $5 billion.

While Kumar says it is too early to say which area had contributed the most to the mobilisations, sources point out that the Resurgent India Bonds (RIBs) of 1998 had received most subscriptions from the Middle East.

Unlike the RIBs, the IMD programme was not marketed in the US because of a delay in receiving regulatory approvals. The US market had contributed 14 per cent of RIB's entire collection of $4.2 billion.

Sixty per cent of the amount raised through IMD will be invested in infrastructure projects or bonds, with an average return of 15 per cent from projects and 12 per cent from bonds. The rest will be kept aside for meeting statutory liquidity ratio (SLR) requirements or parked in treasury instruments.

The IMD funds will remain invested in government securities till such time they are required for forex and infrastructural investments in the country.

Fifty per cent of the amount mobilised by the participating banks will be lent to them at 10 per cent for a period of five years.

SBI will incur a total cost of 10 per cent in dollar terms on the IMD funds. Apart from the coupon rate of 8.5 per cent, this will include 0.5 percentage points in issue expenses and 1 percentage point as exchange risk. In pound sterling, the cost will be at 7.85 per cent, while it will be 6.85 per cent in euro, payable half-yearly. No cash reserve ratio (CRR) will be imposed on the IMD funds.

The IMD programme opened on October 21 and had announced an earliest closing date of October 31. This was later extended to November 6.

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