This is the second year in running that the FI is going in for an umbrella issue. In FY 1998, the IDBI received permission from SEBI for the first time to raise Rs 5000 crore and in FY 1999 it has hiked its resource mobilisation through this route by Rs 1000 crore. SBI Capital Markets is likely to be appointed the lead managers to the umbrella issue.

Sources said that the ICICI is also likely to move the securities watchdog with a similar proposal. Last year, ICICI had also received permission to raise Rs 5,000 crore through the umbrella issue route. Sources also pointed out that IDBI is expected to hit the market with the first tranche in May and will enter the market with either four or six tranches in FY1999. IDBI successfully launched its Flexibond-VI issue on February 22 to mobilise Rs 750 crore from the retail investors. This issue, having a green-shoe option of another Rs 750 crore raised slightly more than the targeted amount of Rs 1,500 crore.

The premier financial institution has already raised Rs 2,920 crore during FY 1998 (from Flexibond 4 and 5) and with Flexibond 6 proving to be a success the FI managed to raise nearly Rs 5,000 crore from the retail market.IDBI has offered four instruments to suit the varying needs of investors in the last tranche: the Regular Income Bond, Growing Bond, Retirement Bond and the Infrastructure (tax) Saving Bond.

While `Regular Income Bond' offered a 14 per cent annualised return for 7 years -- giving investors an option to receive interest payments either quarterly, half-yearly or annually and an early encashment facility at the end of the fifth year (in which case its annualised return will be about 13.75 per cent), its `Growing Interest Bond' had a built-instep-up in its interest rates, which rise from 11 per cent in the first year to 20 per cent in seventh year.

The Retirement Bond was an instrument designed for investors retiring in the next 3-5 years. It was an ideal tax planning avenue whose maturity varied from 9 years to 14 years depending upon the waiting period. Investors could receive annuity after the wait period for the remaining period of maturity. The fourth instrument was the Infrastructure (tax saving) bond which offered 3 and 7 years maturity options. Investment in the 3-year maturity bond could be made to avail tax benefit upto Rs. 70,000 under section 80(2)(XVI) of the IT Act or alternately to derive capital gains benefit under section 54EA of the same act.