SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA
Head Office:10/10 Madan Mohan Malviya Marg, Lucknow-226 001
Mumbai Office:Nariman Bhavan, 227, Vinay K. Shah Marg, Nariman Point,Mumbai-400 021

July 24 , 2001

Dear Bondholder,
Exercise of Call Option SIDBI Deep Discount Bonds - Series I

Small Industries Development Bank of India (SIDBI) had made in November 1992,a public issue of 2 types of unsecured redeemable bonds viz. Deep Discount Bond - Series I (DDB) and Happy Returns Bond - Series I (HRB), date of allotment for which was February 1,1993. In terms of offer document dated October 16, 1992, SIDBI has reserved a right [Call Option] to redeem the DDB on February1,2002.The early redemption option is also available to the holder [Put Option] on February1,2002. Details of Call Option / Put Option are indicated on the face of the bond certificate.

2.SIDBI hereby gives notice of exercising call option in respect of DDB pursuant to the terms and conditions of these instruments vide offer document dated October 16, 1992. The bonds will be redeemed by SIDBI on February 1, 2002 at the deemed face value of Rs.9600 per bond. No interest will be payable on the bond after February 1, 2002 i.e. the call option date.

3.For the purpose of redemption, it is necessary to surrender bond certificate(s),duly discharged by all bondholders, to the Registrar viz. Investor Services of India Ltd., IDBI Building, 2nd floor, ‘A’ Wing, Plot Nos.
39,40 and 41, Sector 11, Post Bag No. 17, CBD Belapur, Navi Mumbai-400 614 (Maharashtra) or any of the offices of SIDBI mentioned on the reverse of the Redemption Application Form, so as to reach on or before December 20, 2001 to enable us to make the payment on February 1, 2002.

4.After processing the bond(s), the redemption warrant(s) will be sent to you by the Registrar. In order to ensure safety, you are requested to furnish details of Bank Account No., the bank name and branch, which will be printed on the warrants.

5.As per Income-Tax Act,1961,tax will be deducted at source on the interest income accrued on the bonds (refer item No.14 overleaf) in case of bondholders who have not submitted Form 15 H / 15 AA.You may,therefore,submit Form 15H/15AA as the case may be for seeking income tax exemption latest by December 20, 2001. In case any application for transfer of bonds is received after December 20,2001 and where in such cases tax exemption certificate in Form 15H/15AA are not received,tax will be deducted at source from the bondholder whose name appears on the Register of bondholders at the time of redemption.

6.The Redemption Application Form and form 15 H are enclosed for your use.

Yours faithfully,

(M.R. Prabhu)
Chief General Manager