The bank also sees the volume of business in euro going up substantially in the near future from other Indian banks Euro related deals. "SBI feels that the Indian banks which have been dealing with SBI for all their euro requirements in the pre-Euro days would like to deal with SBI for all their Euro requirements as well," said an SBI press release.

State Bank has also infused additional capital to its Frankfurt branch to enable it to handle large volume business in euro. "SBI has a full-fledged branch at Frankfurt which is going to be the nerve centre of eurozone market especially after sterling opted out of euro. Hence, to enable the Frankfurt branch to exploit the unified eurozone market and avail the oppurtunities available the capital of the Frankfurt branch has been increased by 45 millionDeutsche Mark recently," said the press release. The introduction of euro has given increased depth and width to the money and forex market in Europe as eleven fragmented currencies and markets have become one currency and one big market. In years to come euro is expected to rival US Dollar as a reserve currency and the eurozone money and bond markets are expected to give savvy investors a very good alternative to US markets.

State Bank of India is also active in wooing other Indian banks to open their Euro nostro accounts with it. Among other Indian banks, Bank of Baroda (BoB) and Bank of India (BoI) are also pitching hard for other Indian banks' nostro accounts. BoB has equipped its Brussels branch to deal in euro and currently officials from its Brussels branch are touring India canvassing nostro accounts. BoI is pitching for Euro nostro accounts by showcasing its Paris branch.

SBI recently sent two officials to India to make presentations to all the Indian banks at various centres. At thesepresentations the branch officials gave details of the Single Window Euro Services for Banks in India (SWESBI) offered by them and suggested methods for making transition to euro smooth and trouble free for the Indian banks.

The euro made its first commercial debut in India on last Friday when SBI and ABN Amro struck a $5 million Euro deal at the rate of $1.1740 per euro. A few other stray deals were also reported on Friday in India as the rest of the world's markets were closed for New Year holidays.

Indian banks are expected to convert most of their legacy currency positions into the euro in the coming days. Liquidity in the legacy currencies will reduce substantially even though one is allowed to maintain legacy currency positions till December 31, 2001. A lot will also depend on the Reserve Bank of India's decision on when to convert a portion of its reserves into euro, which is expected soon.