The bank is set to strike the first off-market deal with the Reserve Bank of India for swapping the foreign currency proceeds with the rupee this week. The swap deal is expected to ease the pressure on the rupee which dipped to a new low on Tuesday and closed at 43.36/37 against the dollar.

In anticipation of the infusion of liquidity, the RBI is embarking on an aggressive open market operations. The move is to sterilise the excess liquidity from the system. The dollar denominated bonds dominates the total collection with $2.12 billion mop-up, followed by pound sterling $62 million and DM 58 million. The total mop-up in dollar terms was to the tune of $2.25billion on Monday.

"We have been able to collect this amount within ten days from select segments of the world population as only the NRIs are allowed to subscribe to the instrument. Barring perhaps Antractica, we all selling it in every continent," Verma said. The first sovereign issue by proxy - India Development Bond - was able to mop up $ 1.6 billion over a period of four months.

The State Bank has revised the targets of 14 collecting banks and agreed to swap 50 per cent of the amount with the rupee funds which will be disbursed to the collecting banks at 9.5 per cent. "We have been revising the limits.

The earlier highest limit set for a bank has been hiked from $150 million to $400 million," Verma said. In effect, the collecting banks will be able to access more rupee resources from the State Bank.

According to sources close the bank, the SBI will strike the first off-market deal with the RBI over the next few days. "It can be a six-month swap at a market-determined forward rate which will berolled over," sources said. The swap deal will ease the pressure on the rupee which dipped to its lifetime low of 43.36/37 on Tuesday. The RBI has aggressively pursing its open market operations to sterlise the excess liquidity from the system. On Monday the State Bank announced it would close the bond issue on August 24 - one week later than the earliest closing date. Verma said the objective is to reach out to retail investors. "The total mop-up will be about $3-3.5 billion and not more than that," Verma said.