"With the subscription figures for the last day still filtering in from thevarious collection centres, the only safe estimate is that the collectionwill exceed Rs 500 crore," IDBI executive director TM Nagrajan told TheFinancial Express.

The Flexibonds-8 issue of Rs 300 crore carried a greenshoe option of anotherRs 300 crore. IDBI had earlier cut the interest rates on the five-yearinstrument by one-and-a-half percentage points (150 basis points) to 11 percent.

While announcing the Flexibond issue, IDBI chairman GP Gupta had said the FIwould not exercise the greenshoe option in case the interest rates were cut."In case the interest rates head southwards after the announcement of thebudget IDBI will not withdraw the issue, however, we will not exercise thegreenshoe option," Gupta had said while announcing the Flexibond issue."We have now decided to exercise the greenshoe option and will retain theentire subscription," Nagarajan said.

The term-lending institution had for the first time introduced a floatingrate bond where the investor will receive interest at a spread of 50 basispoints above the benchmark rate-the weighted average yield on 364-daytreasury bills. The tenor of this instrument is five years with a call andput option after three years.

The Flexibonds-8 offers an annualised return of 11 per cent for a five yearbond as compared to the 12.5 per cent offered in Flexibonds-7 which was openfor subscription in July 1999.

"IDBI had raised around Rs 1,500 crore through the earlier tranche floatedin July, 1999. However, on account of lesser repayments this year, and inanticipation of interest rates going southwards, we have limited the size ofthe current offering to only Rs 300 crore," IDBI said.

The Flexibonds-8 issue offerred four instruments - regular income bond,growing interest bond, floating rate bond and infrastructure tax-saving bond.The regular income bond, with a tenor of five years, carried an annualisedrate of 11.0 per cent, while the growing interest bond with a built-instep-up coupon offerred 9.75 per cent in the first year up to 10.5 per centin the fifth year. Meanwhile, the infrastructure tax-saving bond offers10.25 per cent payable annually for three years and is eligible for taxconcessions under section 54EA and section 88 of the IT Act. The Flexibond-8issue was also available for subscription by NRIs, OCBs and FIIs onrepatriable basis. IDBI has raised Rs 7,675 crore in the current fiscal,including flexibond-7 of Rs 1,500 crore and omni bond tier-II of Rs. 1,500crore.