All efforts of Reserve Bank of India to evanish teaser loan scheme from banking system would be soiled if the largest lender of the country actually brings to practice what it is planning to do. State Bank of India is planning to continue with the teaser home loan scheme even after December 31.

However, the next phase of these loans would price them slightly higher than the present interest rates charged by them. The reason behind may be attributed to the proposed rise in base rate of the banking major in 2011. The base rate of the bank currently stands at 7.6%.

"We are planning to extend our special home loans scheme beyond December 31 with few changes in the interest rates as we have to cover up our additional costs. The final decision on the same will be taken at a meeting on Thursday," said an SBI official.

Presently, SBI charges 8% interest for the first year of the loan, 9% for the second and third years and thereafter, the rates will be as per the prevailing floating rates in the market.

RBI had urged the closure of teaser loans and had also raised provisioning on them to 2%. Lenders like ICICI and HDFC Bank even closed this category of loans.

SBI however says that it will definitely assure the apex bank before continuing with the scheme. "We do take into account the repaying capacity of the borrower and at the same time we also make necessary provisions for these loans. We are going to assure RBI about this," the official said.