According to a top State Bank official, the bank, which had mobilised $4.17 billion through the five-year bond issue, will round up the talks this week and sew up different aspects of the deal.

State Bank, which is finalising a number of schemes for core projects, plans to increase its exposure for infrastructure to 30 per cent from 25 per cent. "The bank is set to lay the foundation for cheaper funding for infrastructure projects in the country," said the official, adding that the bank will stick to the low rate (11 per cent) in the consortium financing along with term-lending institutions.

Along with the cheap funding, the bank will also opt for asset securitisation in a major way through a special-purpose vehicle. It has already asked SBI Caps to chalk out a strategy for this and has formed a high-level committee to sort out the various legal and financial bottlenecks involved in asset securitasation.

"The bank will be both a buyer and a seller for the asset-securitisation market,'' said the official. It will go for asset securitasation for both short-term and long-term projects, said the official.

The bank is confident that there will be a strong demand in the market for State Bank papers as they will be relatively cheaper with definite returns. "The bank will also like to lay its hand on brokering fees for securitisation deals,'' he said.

With pegging of the loan rate at 11 per cent, the State Bank will undercut other banks and financial institutions by a wide margin. "Even if we undercut our competitors by 300-400 basis points, we will still have a comfortable spread as the cost of Resurgent bonds is about 8.5 per cent," SBI chairman MS Verma said.

Verma attributed the success of the five-year triple-currency issue to the specification of end-use of the bond proceeds. "We had spelt out to the investors that the money will be used in infrastructure financing. The non-resident Indians believe that infrastructure is the key to the country's development and hence the overwhelming response to the issue," Verma said.

The State Bank chairman is confident of disbursing about Rs 4,000 crore from the Resurgent corpus towards infrastructure projects in 1998-99. "There are enough projects in the pipeline. I am sure we will be able to disburse about Rs 4,000 crore in the country and abroad this fiscal for core financing," Verma said.

There are about 50 large ready-to-commence projects to which banks and institutions have sanctioned about Rs 30,000 crore. The demand from infrastructure in the next two years alone is expected to be about Rs 60,000 crore. Verma said that infrastructure projects which are borrowing at 15-16 per cent rates, will be at an advantage if they borrow from the State Bank given its low-cost funds.