"Banks would soon have to realise that for any increase in the retail portfolio there is a servicing cost attached to it. Therefore, a time might soon come when the current rates might have to look different," SBI managing director Ashok Kini said.
He, however, did not elaborate on the extent and timing of the upward revision in retail loans rates.
At present SBI charges 8 to 9.25 per cent for home loans depending on the tenure of the loan. Its personal loan rate is nine per cent and charges 11 to 11.25 per cent for two-wheeler loans. Its interest rate for car loan varies from 7.5 to 11 per cent.
SBI's home loans have grown by 26 per cent in the third quarter. There is robust demand from Tier II towns, Kini said, adding though SBI was not strong in personal and auto loan segments, its market share has improved in this segment with 15 per cent growth.
The move to review retail loan rates follows the increase in short term corporate lending rates. Many banks have hiked the corporate loan rates by 25-50 basis points without increasing their prime lending rates.
Reserve Bank of India's in its review of monetary and credit policy had raised the increase reverse repo rate by 25 basis points to 5.25 per cent.
Just after the policy review, bankers had said they see a 25-75 basis points rise in corporate lending rates at the short end.
The trigger for revising lending rates is coming from increase in cost of funds, amid a severe squeeze in liquidity in the banking system. The yields on government securities have also firmed up by over 50 basis points.
Many banks have increased interest rate on deposits to raise resources to fund credit growth. The most recent hike of 25-75 basis points in deposit rates was effected by Union Bank of India.
SBI would offer Western Union Money Transfer service at 200 branches in four circles -- Punjab, Himachal Pradesh and Jammu and Kashmir cluster, Kerala, Andhra Pradesh and Karnataka.
These four circles have maximum concentration of families with one or more of their members working abroad.