In what may come as a relief to borrowers, State Bank of India (SBI) on Thursday said it is not considering an increase in lending rates even though some private lenders have resorted to that step.

Pratip Chaudhari, chairman of SBI, attributed the decision to the "huge influx" of deposits the bank is getting at present.

"We are not (thinking of hiking lending rates) because we are witnessing a surge in deposits. We are getting a huge influx from the liquid mutual funds and last week, we have got about Rs 10,000-15,000 crore of new money. We are sitting on a significant amount of extra cash," he said.

Chaudhari was speaking to reporters after attending the customary luncheon meet hosted by Reserve Bank of India governor D Subbarao after the apex bank's central board meet here.

The comments come within days of two private lenders Yes Bank and HDFC Bank hiking their minimum rates of lending following the RBI's liquidity squeezing moves last month.

Others like Axis Bank and foreign lender Deutsche Bank have hiked their deposit rates, generally seen as a precursor to a lending rate increase.

Linking the move by the private banks to their excessive reliance on wholesale deposits, Chaudhari said SBI stands to benefit because it is not dependent on the stream.

"The people who are borrowing in the wholesale market are challenged, but we are lending in the wholesale market. So in a way, its good for us."

"We are not seeing any pressure. Our cost of funds remains at about 6.7 per cent. At base rate as well, we have a spread of 3 per cent," Chaudhari added.

In order to curb speculation in the rupee, the Reserve Bank announced a series of liquidity tightening moves, including restricting banks' overnight borrowings and sale of Government bonds, last month.

As a result, rates in the money market shot up, leading to some banks experiencing pressure in their cost of funds and hence hiking lending rates. SBI's base rate of 9.75 per cent is now the lowest in the industry.

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Keywords:borrowers, State Bank of India ,SBI, private lenders , deposits, mutual funds , customary luncheon ,HDFC Bank,RBI, Axis Bank ,foreign lender Deutsche Bank , wholesale market, Reserve Bank , money market , industry