The final figure from the issue, which was targetting Non-Resident Indians (NRIs) and Overseas Corporate Bodies (OCBs) is expected to touch $5.26- 5.27 billion, even without partcipation from the US market. Some funds which are still in the pipeline were getting accumulated till late Tuesday evening.

Market sources reveal that Citibank has topped the list of mobilising banks by collecting over $700 million. HSBC's mobilisation is pegged at around $ 600 million.

"This is a great day for the bank. The bank has managed to achieve the feat within a fortnight's period of time," said SBI chairman Janaki Ballabh, adding that the bank intends to bring in almost 60 per cent of the mobilised funds within a month. The bank's Resurgent India Bond had collected around $4.23 billion within 20 days in 1997.

Finance minister Yashwant Sinha on Tuesday congratulated the bank on the highly-successful scheme. "The IMD has witnessed an unprecedented response from investors all over the world and the resounding success of the IMD is indicative, in no uncertain terms, of the confidence reposed by foreign investors, particularly NRIs, in the fundamentals of the Indian economy'', Mr Sinha said in a statement.

"The deposits received through IMD will also help the country in meeting the increased external obligations on account of the rise in oil prices," Sinha said.

"It also highlights the high level of commitment by Indians living abroad towards India's progress and prosperity," he said.

The achievement is extremely significant, considering that the US could not be targeted under the scheme, said an official release.

Speaking to The Financial Express, former SBI chairman Mr GG Vaidya who had steered the scheme in its first 10 days said he was not surprised by the scheme's total mobilisation.

"It was possible to collect as much as $ 6 billion under the scheme," he said.

According to Mr Ballabh, the pressure on the domestic FCNR (B) deposit is very nominal, which might be around five per cent.

"The response for the scheme has been massive from the Gulf markets because of good returns," he said.

The IMD funds will be invested as per the earlier planning, he said.Mr Ballabh said the forex will be transacted through the Reserve Bank of India. The IMD interest rate was 1.75 per cent higher than the current six-month Libor.

SBI had offered an interest rate of 7.5 per cent per annum and 6.5 per cent per annum for pound-sterling and euro-deposits respectively.

CARE chief economist Mohan Nagarajan noted that high interest rates contributed to a lot in bringing in such a large subscription".

SBI will invest around 40 per cent of the total mobilisation in government securities, 50 per cent with various banks which helped SBI mop up deposits, and the remaining to be parked in infrastructure projects by SBI itself. The mobilising banks will also invest the monies in infrastructure projects.

Says JM Securities head (fixed income) Nanda Kumar Surti: "The rupee is likely to be stable for the next couple of months and it will comfort the investors. Investments by the financial institutions in equity markets will definitely increase".

It is likely that the liquidity position of the market will ease up after this huge inflow. There is already excess liquidity prevailing in the market. Therefore, interest rates will surely come down, it is felt.

Observes Mr Surti: "The interest rates will come down drastically, over one and half months. After the Resurgent India Bond collections, interest rates fell by two per cent. The story will not be very different this time," he said.

A dealer with eMecklai thinks similarly: "Such huge deposits will ease the liquidity position and lower the interest rates."

Bank of Baroda's general manager (treasury) KC Chakrabarty said: "Liquidity position will remain comfortable." Demand for liquidity is also likely to rise, as the Reserve Bank of India will come up with borrowing programmes.

So, there will be no major impact on interest rates; it can fall, at the most, by 20-25 basis point, Mr Chakrabarty noted.