"If it (housing loan rate) needs to be revised, obviously it would be revised downward," SBI Chairman O P Bhatt told PTI, adding that the bank would consider either cutting the interest rate or offering festival season discount.

"Whether we revise it downward or offer discount for festival season from October for a month or a couple of months" would be decided by the Bank's Asset and Liability Committee, he said. It was possible to offer discount on loans booked during the festival season, he added.

Asked what his expectations were from the Reserve Bank on the interest rate front, Bhatt said, "Rates would definitely not go up. Whether they remain the same or they move down by 25 basis points is anybody's guess... I am not anybody to decide on this... but this is my personal view."

The RBI is slated to announced its half-yearly credit policy review on October 30 and all the major players in the housing loan segment are awaiting the central bank's decision to take a call on interest rates.

On whether RBI should take a cue from the cut in rates announced by the US Federal Reserve, which is combating the sub prime crisis, Bhatt said it was just one of the factors.

"India is not so much America-centric but RBI will definitely use this development as an input in its decision making exercise. You have to take cues from several sources not only from what is happening in America. Whatever happens in the other parts of the world also affects us," Bhatt said.

Bhatt's comments come days ahead of the meeting of the Asset and Liability committee of the Bank, which would decide on revising interest rates. The committee was otherwise also expected to take into account the 50 basis point rate cut announced by some major players including ICICI Bank [Get Quote] and HDFC [Get Quote] on loans booked till October.

SBI is currently offering home loans at 12.75 per cent on fixed interest rate basis. The floating interest rate ranges between 10.75-11.25 per cent depending on tenure.

The country's biggest lender's move to offer discount or cut interest rate may force other public sector competitors to offer similar incentives to housing loan borrowers.

Meanwhile, to spur home loan business, the State Bank of [Get Quote] Patiala, one of the associate banks of the SBI, recently waived the processing fee on fresh loans and reduced interest rates from 11.25 per cent to 10.5 per cent (floating) for a period above 5 years and up to 20 years.

While most banks are reducing floating interest rate, another important player - IDBI - reduced fixed interest rates on home loans by almost 100 basis points with effect from September 1. Among other players, Bank of Baroda [Get Quote] slashed home loan rates by up to 50 basis points last month.