"It will definitely cross the Rs 1,342-crore level mobilised by IDBI's Flexibond-IV issue," the IDBI chief said. Merchant banking sources say that this speaks volumes about investor confidence in financial institutions, and the right pricing of this issue.

On reasons behind the issue's success, Gupta said that retail investors latched-on to the issue because of its correct pricing and because they were apprehending an imminent fall in interest rates. The recent fall in interest rates of government saving schemes also contributed largely to the issue's success, Gupta said. The IDBI chairman said that the recent movements in interest rates could be a strongsignal for fall in real interest rates in the near future.

It is for the first time this fiscal that the term-lending institution has been successful in hitting the greenshoe target of its retail float. The Flexibond-V issue, with a core size of Rs 750 crore and carrying a greenshoe option of another Rs 750 crore, closed on Friday.

IDBI had earlier received the Securities & Exchange Board of India's approval for extending the deadline for the closure of the issue. "We had extended the date of closure on the basis of demand by retail investors wanting to subscribe to it as we were not able to receive subscriptions on January 12 owing to nationwide bank strike," said an IDBI official.

Acording to lead managers of the Flexibond-V issue, there was a last minute rush by retail investors.

IDBI Flexibond-V offered four instruments: regular-income bond, growing-interest bond, multi-option bond and infrastructure bond. The regular income bond offers an annualised interest of 14 per cent per annum, 13.5 percent semi annually and 13.3 per cent quarterly, while the growing-interest bond offers an annual interest of 11 per cent per annum for 1st year and 20 per cent per annum for the seventh year.

The other two instruments were the multiple-option bond with an equal interest payment at the rate of 17.5 per cent after two years wait or 22.5 per cent per annum after three years wait or 30 per cent per annum after four years wait. The infrastructure bond, which offers tax benefit to investors under Section 88, 54EA and 54EB, offers 12.5 per cent per annum for three years (under sections 88 and 54 EA) and 13 per cent per annum for seven years (under section 54 EB) with an annual and cumulative interest option.