The nation's largest lender, State Bank of India has indicated that a rise in home loan rates can be expected in the near future. Shortage of cash may lead to the bank taking such a move, said Chief Financial Officer S S Ranjan.
The bank has increased its benchmark lending rate (base rate) by 40 basis points taking it to 8%.
The major reason accounting for the shortage of cash on the part of banks has been the liquidity tightening measures adopted by Reserve Bank of India to tame the wild rise of inflation. RBI has raised policy rates six times in the year 2010.
According to Ranjan, credit expansion of the bank is expected to reach 18% by the end of this fiscal.
The bank will also be setting up its first branch in Doha in the first quarter of 2011, informed a senior bank official.
"The new office should start functioning by March," Satyajit Pratap, CEO-designate for the branch said.