The State Bank of India does not plan to hold road shows in the United States for its renewed Resurgent India Bonds scheme, being offered from next month.
Disclosing this to media in Bangalore, SBI Chairman A K Purwar said the road shows for the RIB scheme would be held primarily in Europe, the Gulf region, Africa and South-East Asia in mid-September.
"There will be no road shows in the US for the time being as we have some issues to be sorted out with the US government. But NRI investors in the US will be eligible to either renew the existing bonds or go for the new bonds being offered at the prevailing interest rates," Purwar stated.
Declining to elaborate on the problems the bank was facing with the US government, Purwar said that the bank hoped to retain 30-35 per cent of the $4.2 billion it had raised last time when it floated the RIBs on August 3, 1998.
"Though the interest rate for the new three-year RIBs will be between 4-5.5 per cent, they will be quite attractive for the 2-million strong NRIs to subscribe as it is still higher than offered elsewhere," Purwar disclosed.
The bank currently offers 4-5 per cent interest rate on Non-Resident External (NRE) deposits. The RIBs will be offered 1-1.25 per cent higher for dollar-based funds and 25 points less than the existing Libor (London inter-bank official rate) for other currency-denominated funds.
"The five-year RIBs will be maturing by this month-end. We will be redeeming them in the first fortnight of October. We are confident that majority of the NRI investors will renew them," Purwar affirmed.
It may be recalled that the SBI issued the five-year RIBs last time to bolster the forex reserves in the aftermath of the Pokhran II nuclear tests and the subsequent US sanctions.
At that time, the bonds were offered at 7.75, 8 and 6.25 per cent interest rates in dollar, pound and mark currencies to NRIs and OCBs (overseas commercial banks) in the US, Europe, UK, West Asia and other countries.
The $4.2 billion RIBs will be maturing on October 1,2003. With the accrued interest, the outgo will be around $5.5 billion on account of redemption.
"With the RBI holding over $85 billion forex reserves presently, redeeming the RIBs will not be a problem," Purwar asserted.
