According to a merchant banking source, the issue may even see an oversubscription of around 2.5 times. The bank has already received close to 42,000 applications and some more applications are expected to come in on October 3. The retail response has been overwhelming as the net public portion of 90 lakh shares was oversubscribed by 1.25 times in the first two days of the openning of issue. Till Wednesday, the net public portion was oversubscribed by 1.75 times. A sizeable portion of the total number of applications came from investors who have applied for shares less than 1000, said another merchant banking source.

According to a market source, as Saturday being the last day before the closing of the issue (after two days of holiday), retail investors are expected to put in more applications.

The response from institutions has also been good. Of the 32 lakh shares reserved forfinancial institutions and banks, SIB is expected to collect around Rs 15 crore which is almost 1.5 times of Rs 10.24 crore.

SIB has been banking on its depositor base as well as NRIs. Most of the retail response came from Kerala and Tamil Nadu. The reserved portion for NRIs to the tune of Rs 7 crore has been subscribed 1.25 times. The employee quota of 16 lakh shares (Rs 5.12 crore) has also been fully subscribed.

The overwhelming response to the SIB issue is despite the fact that the UTI Bank issue was also open for subscription (the UTI Bank issue opened on September 21 and the SIB issue opened on September 22). UTI Bank's issue has been oversubscribed by 2 times.

The paid-up capital of SIB will now rise from Rs 19.42 crore to Rs 35.42 crore. SIB demanded Rs 16 on application and Rs 16 on allotment. SIB offered 1.6 crore equity shares of Rs 10 at a premium of Rs 22 per share.

Although SIB has managed an overwhelming public response like many other bank issues (both private as well as public sectorbanks), it remains to be seen whether the bank will give any capital appreciation in the short-term.

Although several private sector banks like Jammu and Kashmir Bank, IndusInd Bank and City Union Bank received very good response from retail investors, they are yet to give any capital appreciation. Except for SBI, HDFC Bank and Corporation Bank, all banking stocks are hardly attracting any buyers even in a relatively stable market.