SBI to review home loan rates next week

NEW DELHI (Reuters) - State Bank of India, the country's largest lender, will decide in a week's time on raising interest rates on home loans, its chief said on Tuesday, following a hike in the state-run firm's key lending rate.

The bank raised its benchmark prime lending rate by 50 basis points to 12.75 percent last week, after the central bank aggressively tightened policy in the face of surging inflation.

"We raised the PLR by 50 basis points, so the rise will not be more than that," Chairman O.P. Bhatt told reporters when asked about the quantum of the home loan hike.

But Bhatt said he did not expect a decline in home loan growth, as data for the first two months of the fiscal year that began in April was strong.

"In the two months of April and May, for which I have data, we have disbursed more money on account of home loans than we did in the corresponding period of last year," Bhatt said. "If we annualise it, it will be about 17 percent more."

Shares of SBI closed down 7.8 percent at a 14-month low of 1,024.65 rupees in a Mumbai market that was down a provisional 3.71 percent. The banking index shed 5.62 percent.