The decision was taken at a meeting of the assets-liability committee (Alco) on Saturday. The Alco met for the second consecutive day to deal with the issue of interest rates in the wake of the Reserve Bank of India's (RBI) move last week to raise repo rates, or the rate at which it lends to banks, by 25 basis points to 8 per cent.
SBI is in a unique situation since its cost of funds had gone up following an increase in deposit rates earlier this month.
On Thursday, SBI chairman Om Prakash Bhatt had said that the bank may consider raising its prime lending rate or alternatively, increase the interest rate on some of its loans to deal with the higher cost of borrowings.
A day later, however, hours before his bank's Alco meeting in Mumbai, Bhatt said in Hyderabad that SBI may absorb the hike and decide only after a while.
A Bank of Baroda executive said, "We will wait and watch how the industry leader moves and then decide our stance."
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Bank of India senior official also said that for the moment there will be no change in rates. "Liquidity is our prime concern but the situation is expected to change after a week," the executive said.
The liquidity position is tight due to payment of the first installment of advance tax that is estimated to have sucked out around Rs 15,000 crore from the system.
Call rates have increased to above 8.30 per cent and it may cross 8.50 per cent this week. The yield on 10-year government securities had hardened to 8.38 per cent on Friday following inflation hitting a seven year high of 8.75 per cent.