The ten foreign banks are ABN-Amro Bank, Abu Dhabi Commercial Bank, ANZ Grindlays Bank, Bank of America, The British Bank of Middle East, Citibank, Credit Lyonnais, Deutsche Bank, HongkongBank and Standard Chartered Bank. The list of public sector banks includes Bank of India, Bank of Baroda, Canara Bank and Punjab & Sind Bank. SBI Caps, the lead arranger to the issue, finalised the list of collecting banks on Saturday. These banks will earn a 0.25 per cent service charge and a maximum brokerage of 1.5 per cent on a graded scale. In addition to that, they will be entitled to access rupee funds to the tune of 50per cent of the collections, or a sum decided by the State Bank -- whichever is lower -- at a cost of 9.5 per cent. "These 14 banks have given a commitment to raise between $10 million and $150 million. Besides, 20 other banks will act as sub-brokers. These banks will not get service charges," sources said.

State Bank will kick off the roadshows this week. Except for the US, it has received approvals from regulators of all other countries. "We are expecting clearance from the US to come through over the next few days," SBI Caps sources said. The bank plans to rope in Indian ambassadors in the US and other countries in the roadshows. Among the 14 collecting banks Citibank has given a commitment to raise the maximum amount -- $150 million. Some of the foreign banks are believed to have launched an ad blitzkrieg in the Middle East, wooing NRIs with loans to invest in RIBs. "They are ready to extend loans at 75 basis points over Libor to NRIs to invest in RIBs. The investors can make a spread of about 150 basispoints by arbitraging between floating rate loans and the fixed rate RIBs," sources said.

By being the collecting banks, the foreign banks will also have access to cheap rupee resources which they can deploy in India as the State Bank has committed to place 50 per cent of the collected amount at 9.5 per cent. "Without the exchange risk, the foreign banks will get five-year funds at a very cheap rate," a senior analyst pointed out.

The five-year instrument, denominated in dollars, pound sterling and deutsche marks, will carry coupon rates of 7.75 per cent, 8 per cent and 6.25 per cent respectively. Although the offer will be open for 30 days, the State Bank reserves the right to close it anytime after 10 working days.

"We are confident of raising over $2 billion. If you take into account that the annual depreciation of the rupee is about five per cent, this are cheap five-year funds. The RIB will create a new benchmark for sovereign borrowing," SBI Caps managing director AR Barwe said.