In its daily research paper on India, JFIB said these three institutions have large exposures to Essar. Essar is exploring the possibility of rolling over the FRNs which matured on July 19.

``We understand that SBI's domestic exposure to Essar, both fund-based and non-fund-based, is in the region of Rs 700 to Rs 900 crore, which is 0.31 per cent to four per cent of its assets and seven per cent to nine per cent of its net worth,'' Jardine Fleming said in a statement today.

``Neither SBI nor Essar are disclosing the exact exposure,'' it noted. JFIB quoted SBI officials as saying that the country's largest bank ``owns a small portion of the FRNs'' and even if there is a default, the loan given bydomestic branches will not be considered as non-performing assets (NPA) in its books.

It said the reason cited by SBI was that the FRN was owned by one of overseas SBI branches and the policy followed by Indian banks did not require them to qualify the loan given by domestic branches as an NPA.

Bank of Baroda (BOB), which too owns some FRNs, has a total exposure of US $ five million to Essar, which is 0.04 per cent of the bank's total assets and 0.8 per cent of its networth--figures that are not significant enough to affect either its npas or its bottomline, JFIB said.

Essar FRN is amongst the first external commercial borrowings (ECBs) contracted in 1994 due for repayment in 1999. With the Essar FRN fiasco, JFIB said, foreign lenders will be more discerning in future.