State Bank of India chairman A K Purwar said upward pressure on interest rates continues despite cooling crude oil prices. "There are a lot of factors behind this. If inflationary pressures come down, it will be better," he said.

Inflation remained unchanged at 7.34 per cent during the week ended November 20 despite a cut in petrol prices. The SBI chairman added that the bank was re-examining all the retail and wholesale loan rates.

But he said the prime lending rate of the bank would not be touched. About 50 per cent of SBI's is at sub-PLR and the total credit growth on a year-on-year basis ending September 2004 stood at 24.5 per cent, Purwar added.

SBI as well as most other banks hiked its deposit rates and home loan rates by 25-50 basis points in recent weeks. (One basis point is one-hundredth of a percentage).

He stated his outlook on interest rates was 'somewhat stable' as against 'stable' earlier. Purwar was speaking on the sidelines of a press conference held to announce the details of SBI's first $1 billion medium term notes programme. 

SBI raised its first tranche of $400 million through fixed rate notes and plans the next tranche in the next fiscal. The issue got a higher than sovereign rating of 'Baa3', making it the only bank in Asia to have pierced the sovereign ceiling. 

"The proceeds of the bond issue are being used to grow our overseas asset book. Total overseas asset of SBI will cross $12 billion by March 2005. Our asset book has been growing at 25 per cent this year," said the chairman.

The bank is also eyeing acquisitions in Asia and Africa, which it plans to finalise in a couple of months. The bank is opening ten new offices in another 6-9 months time in markets such as Sri Lanka, Bangladesh and United Kingdom.

The MTN issue was priced at a coupon of 4.75 per cent and a yield of 4.847 per cent to investors, which is the lowest ever yield on an Indian Eurobond issue. The lead managers to the programme were Citigroup, Deutsche Bank and HSBC.