FOR IMMEDIATE RELEASE                                    2001-139


STATE BANK OF INDIA AND CITIBANK, N.A. SETTLE SEC CHARGES INVOLVING 
AN UNREGISTERED SECURITIES OFFERING

Washington, DC, November 19, 2001 - The Securities and exchange 
Commission announced today that it has issued an order against the 
State Bank of India (SBI) and Citibank, N.A. (Citibank) finding that 
they violated federal securities laws by selling “Resurgent India 
Bonds” (RIBs) in the United States without filing a registration 
statement with the SEC.  

The Order finds that between August 5, 1998 and August 24, 1998, 
SBI directly, and through the marketing efforts of a subsidiary and 
Citibank, raised approximately $532 million in the U.S. by selling 
RIBs to Non-Resident Indians (NRIs) and entities owned or 
controlled by NRIs.  Of that amount, Citibank sold approximately 
$160 million of the bonds.  

Under the Order, to which SBI and Citibank consented without 
admitting or denying the SEC's findings, the SEC directs both SBI 
and Citibank to cease violating Sections 5(a) and (c) of the 
Securities Act.  

The Order’s findings include:

SBI, the largest commercial bank in India, with offices in New York 
City (SBI New York), Washington, D.C., Chicago, Los Angeles and San 
Jose, announced in July 1998 that it hoped to raise more that $2 
billion of foreign currency worldwide through the sale of RIBs.  SBI 
entered into agreements with Citibank and others to act as “brokers” 
to seek subscriptions from eligible investors in the United States 
and throughout the world.  Also in July 1998, SBI appointed 
“collecting banks,” including SBI New York and Citibank, to act as 
regional centers where applications would be collected, processed 
and forwarded to SBI.  

In SBI’s pre-offering announcements, the RIBs were described as five-
year denominated instruments carrying interest rates as high as 8%, 
transferable outside of India, and giftable within India. The 
announcements also stated that only NRIs and their affiliated entities 
could purchase the RIBs, and that the proceeds of the offering would 
be used mainly for infrastructure development in India.  

In the United States, SBI and Citibank’s NRI Services division 
principally conducted the marketing of the RIBs.  Those marketing 
efforts were widespread and aggressive, and specifically targeted 
approximately one million NRIs living in the United States, many of 
whom were also United States citizens.  Those marketing efforts 
included, for example, mass mailings to approximately 90,000 NRIs 
as well as cold calls placed by both employees and agents of Citibank 
and SBI.  

SBI’s marketing campaign featured the name “RESURGENT INDIA BOND,” 
which SBI and its subsidiary displayed in all of their marketing 
materials in large bold capital letters.  SBI’s and Citibank’s 
marketing materials repeatedly referred to the RIBs as “bond[s]” and 
“investment[s],” and frequently used terms commonly associated with 
securities offerings.  Citibank’s marketing materials also touted 
characteristics of the RIBs that are similar to government bonds, 
such as: (1) tax benefits; (2) transferability; and (3) proceeds to 
be used for infra-structure projects in India.  While using such 
terms as “bond” and “investment,” some of Citibank’s documents also 
described the RIBs as “5-year fixed return deposit[s].”

SBI directly raised $182 million from approximately 12,000 NRIs 
and partnerships, corporations and other entities principally 
owned by NRIs.  Citibank directly raised approximately $160 
million from at least 5,000 NRIs and partnerships, corporations 
and other entities principally owned by NRIs.  

The Order finds that the RIBs are securities and that SBI and 
Citibank violated Sections 5(a) and (c) of the Securities Act 
by offering and selling the RIBs when the offering of such 
securities was not registered with the SEC.  The Order issued 
today orders respondents to cease and desist from committing 
or causing any violation and any future violation of Sections 
5(a) and 5(c) of the Securities Act.

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