With the bonds issue turning out to be a "resounding success", almost all the 14 collecting banks and the 20 broking banks are expected to exceed the underwritten amount. The Resurgents Bonds issue is expected to collect $3.5 billion by the time it closes on Monday.

Money-market dealers are concerned about the use of the excess money by the foreign banks. With most of the collecting banks being foreign banks, they are likely to be in a position where they will have enough rupee funds to play in the inter-bank call money market.

"They are not known to invest in government securities and fixed-rate repos. So the rupee funds in possession of these banks will find its way in the money market. They might also use the money to arbitrage between the forex and money markets in the short term," a primary dealer said.

At a time when call rates are high after the repo rate was hiked to 8 per cent and the raise in banks' cash reserve ratio (CRR) to suck out over Rs 5,000 crore from the market, the kitty will be a bonanza for foreign banks, industry-watchers feel. Most of these banks are traditional borrowers who will now turn into lenders and try to keep the rates high.

"State Bank will allow banks to retain 50 per cent of the collected amount instead of the underwritten amount," a source handling the issue said.

Banks involved in the exercise were earlier hesitant to collect more than the committed amount as they were of the view that State Bank would not allow them to retain excess amount. "That is no longer the case, and each bank has been told to collect as much as it can," the source said.