"We will make at least Rs 100 crore as profits in this financial year by deploying the RIB proceeds," chairman MS Verma told The Financial Express.

Till the weekend, the five-year bond, aimed at tapping non-resident Indians the world over and overseas corporate bodies, mopped up close to $3.4 billion.

"I expect the total collection will be about $3.5 billion and not more than that...We will keep about 25 per cent of the issue proceeds abroad, and the rest will be brought to India. You can say that by September, over Rs 9,000 crore will come into the system," Verma said.

State Bank will make at least Rs 100 crore as profits by deploying the money in gilts, overnight call money market and lending rupee funds to collecting banks."We will deploy between Rs 4,000-5,000 crore in government securities and make a spread of about 2.5 per cent, which will translate into Rs 45 crore profit this fiscal.

" Besides, we will deploy the funds in the money market and keep a half a percentage point's spread while offering the rupee funds to the collecting banks. The total profit this fiscal will be at least Rs 100 crore from the RIB funds," Verma said. According to the arrangement, the 14 collecting banks can access 50 per cent of the collection in rupee terms from State Bank at a cost of 9.5 per cent. State Bank and its subsidiaries will account for about 35 per cent of the total collections, Verma said.

In the long run, the five-year money will be used to back infrastructure financing. "We have a lot of infrastructure projects in the pipeline...In the short term, the money will be deployed in gilts and money markets," Verma clarified.

In anticipation of the infusion of liquidity, the RBI has already hiked banks' cash reserve ratio (CRR) by one percentage point with effect from August 29, which will suck out over Rs 5,000 crore from the system. It has also embarked on aggressive open market operations by selling gilts. The move is to sterilise the excess liquidity in the system.

"Despite the CRR cut and repo rate hike, I do not see the interest rates going up for corporates. In the short term, the rates will harden in the money markets, but it will not have any impact on banks' lending rates," Verma pointed out. The dollar-denominated bonds dominates the total RIB collection followed by pound sterling and deutsche mark. According to market sources, it has not done "well" in the US market.

"We covered primarily the India Development Bond constituency. This is the biggest issue ever floated by any Indian entity," Verma said. The first sovereign issue by proxy -- India Development Bond -- -was able to mop up $1.6 billion over four months. Resurgent bonds will end up with more than double the IDB mop-up within just 15 working days.