State Bank of India has said that it is planning to retain the retail over-subscription to its tax-saving bonds issue, which will take the total amount raised through the mega issue up to Rs 5,500 crore.

“We will retain up to may be Rs 5,500 crore...the rest we will return,” the bank Chairman, Mr O.P. Bhatt, told reporters on the sidelines of an IBA conference here today.

As against an allocated Rs 1,000 crore, subscriptions from retail investors are at Rs 4,500 crore while an additional subscription of nearly Rs 4,000 crore has come from other investors including high net individuals.

“Our terms of issue is such that in the retail segment, we could take as much as we want up to Rs 10,000 crore and while from other investors we can take up to Rs 1,000 crore,” Mr Bhatt said.

The issue, which had opened on February 21, closed on Tuesday. Investors were attracted to the issue because of its competitive coupon rate and the timing, which came during the end of the fiscal when individuals do tax saving investments.

The issue is part of the Rs 10,000-crore retail bond programme SBI has planned for FY ’11 through FY ’12. Already the bank had raised Rs 1,000 crore in the first tranche of the issue last October, which was oversubscribed 19 times. That was the first retail bond offering in the country by a corporate entity.

The bank is offering 9.75 per cent to retail investors on the 10-year bonds, and 9.3 per cent for non-retail applicants. These bonds carry a call option in the fifth year.

For the 15-year bonds, the coupon is 9.95 per cent to retail investors and 9.45 per cent to non-retail investors. These bonds have call option in the tenth year.

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