India's largest bank, State Bank of India (SBI) will consider revising its interest rate in the second half of the ongoing week along with an increased lending to the mutual fund sector and to non-banking finance companies (NBFCs), said O P Bhatt, Chairman of SBI.

SBI has already given loans worth Rs 5,000 crore to help mutual funds that are facing a credit crunch. "SBI has probably been the biggest lender to mutual funds over the last few weeks. We are pumping in money also because we have resources. In the coming days, we intend to provide additional assistance," said Bhatt.

This move follows the RBI announcement to allow banks to raise additional resources through the repo window in order to meet the funding needs of NBFCs, which have been facing tight liquidity for the past 45 days.

The Bank's cost of funds is likely to lower by around 25 basis points due to a series of cuts in CRR. The money set aside for meeting the CRR requirement does not allow banks to earn any interest and thus the reduction in this percentage will help banks in reducing their cost of funds.

Bhatt confirmed that the officials of SBI have started calculating the expected impact of RBI moves on the bank's cost of funds. "It is difficult to take a medium-term or long-term view. We will take a view on interest rates after I return from Delhi," he added.

Finance Minister P Chidambaram is scheduled to meet public sector bank chiefs on November 4th to discuss the growth of credit growth and capital needs of the banks.

Currently SBI has a statutory liquidity ratio (SLR) of around 29% and the bank can raise an additional of around Rs 25,000 crore when it goes up to meet the acceptable limit of 25% of net demand time liabilities.

Mr. Bhatt said that the bank has adequate liquidity and recent policy measures are also expected to improve the overall liquidity in the system.

Although SBI is facing a demand crunch in its home loans and consumer durables finance division but its credit flow is increasing at nearly 31% as compared to its set target of 25% for the year, said the banker.