The bank has decided to launch a new car loan product, whereby it would charge 1,700 as EMI on a loan of 1 lakh, at an interest rate of 11.5 percent per annum.

"We are coming out with an attractive product for car loan, in which EMI will be 1,700 per lakh. If someone has taken a loan of 3 lakh, then he will pay close to 5,000 as installment," SBI Chairman Pratip Chaudhuri told reporters.

"Interest will also be calculated on daily balance," he said. Click to Apply for SBI Car Loan

Asked about its 20,000-crore right issue to fund its expansion plans, Chaudhuri said, "It is very much there and it should happen next month or so".

He said, lending rates would continue to stay upward in the wake of spiralling inflation.

"Interest rates are likely to remain high because inflation is high till such time, inflation is high, the Reserve Bank finds it difficult to lower the interest," he said.

Describing pre-payment penalty as anti-customer step, the SBI Chairman said the bank had already waived off such penalty on floating loans two months back.

"We think it (pre payment penalty) is an anti-customer step. We do not want to treat our customers as hostages and charge ransom from them (to allow them to move to other bank where they get cheaper loan)," he said.

Chaudhuri exuded confidence that the bank would achieve a good rate of growth in deposits and advances in the current fiscal on the back of the country''s expected 8 per cent growth in GDP.

"Bank should be doing well because country is growing at 8 per cent. We think our deposits and loan growth should grow by 20 percent in current fiscal," he said.