The largest lender of the country, State Bank of India has raised interest rates on short term corporate loans by 25-50 basis points.

"With surplus liquidity gradually disappearing from the system, we have re-priced certain segments of our short-term corporate loans by 0.25-0.50 bps upwards, O P Bhatt, Chairman of SBI said.

He however said that the deposit rates are unlikely to raise immediately. The bank expects liquidity to persist in the economy. The bank would soon be shelling out Rs 18,000 crore for 3G auctions.

"We have got requests and demands for that kind of money. At the maximum we will lend Rs 18,000 crore. Having said that, we are still having a surplus liquidity of Rs 26,000," said Bhatt.

Union Bank of India CMD, M V Nair has said that the bank would be spending Rs. 2000 crore for 3G auctions. "Liquidity will not be impacted with the money flowing out as we already sitting on adequate liquidity," he said.

Speaking about bad loans, Bhatt said that NPAs of the bank have declined in the past few years. The bank had recorded a decline in net profits in the Q4 of the last fiscal owing to increasing in NPAs.

"Usually in April there is always a negative growth. So it is too early to say if it is because of the slack season or if there is more to it," he added.