So far State Bank, Indian Bank and the Mumbai District Cooperative Bank have contributed substantially.

The issue, backed by the state government guarantee, has been lead managed by Alpic Finance. Commercial banks seem to have ignored the issue and wrote to the Reserve Bank seeking confirmation on its SLR status. Apparently, the corporation is yet to receive the central bank's clearance in the matter.

However, according to state advocate general CJ Sawant, the bond issue has received the status of approved securities on the strength of the government guarantee and that no prior approval of the Reserve Bank is required.

Sawant said bonds series V were approved securities within the meaning of the Section5(a) of the Banking Regulation Act. Investments made by banks or financial institutions in the issue must be considered securities within the meaning of the Section 24 of the Banking Regulation Act. These securities must not be encumbered and these could be accounted for maintaining SLR, he said.

State irrigation secretary RG Kulkarni told The Financial Express on Tuesday that state chief secretary P Subrahmaniam would soon hold talks with the Reserve Bank deputy governor YV Reddy to find a way out of the SLR impasse. "We trust that the Reserve Bank will cooperate and do the needful without any loss of time for timely completion of the irrigation and drinking-water supply projects," he added.

Kulkarni said bonds and other securities as mentioned in the Section 20, sub-section (a) of the Indian Trusts Act and government guarantee-backed ones do not require the Reserve Bank's or central government's notification.

He said the series V bond and earlier bonds issued by the corporation and other irrigationdevelopment corporations have been listed on the National Stock Exchange, Mumbai and Pune stock exchanges.

Kulkarni reiterated that with the status of an SLR security, it would be possible for the state to lower the rate of interest and still make it attractive for banks to invest in these bonds, he said.

He said cooperative banks are keen to invest in these bonds.