To cash in on the festive season demand, India's largest bank, State bank of India, is contemplating to reduce its interest rates on retail loans such as home loans. It has indicated that it could slash rates in this segment to accelerate growth in consumer loans, particularly, home loans segment.

On the matter, the Chairman of SBI, Mr. Pratip Chaudhuri said, "We had an Asset Liability Committee meeting (ALCO) meeting and there we did not cut the rates. But I'm not ruling that out and it could happen in the next two to three weeks. We will see how the loan growth picks up."

It is speculated that any rate cut by SBI will trigger off a series of similar rate cuts by other public sector banks. Chaudhuri added, "In fact, we would not be surprised if in this year our home loan grows by 30 per cent." He also mentioned that the bank can afford to slash lending rates due to its surplus liquid resources to the tune of Rs. 60,000 to Rs. 70,000.

It is to be noted that Chaudhuri's comments have come following the release of Reserve bank of India's monetary policy review for the second quarter. In the review, the bank kept key policy rates at the same level and decided not to lower them, in order to control inflation.