Mumbai: The State Bank of India will soon increase equated monthly installments (EMIs) on its home loans as interest rates have gone up by two per cent in the last one year.

"So far, we have resisted doing so but we will do so now," SBI managing director Yogesh Agarwal said, adding that there is no possibility of any immediate rate hike.

"As of now there is no change. The bank was awaiting the RBI''s stance in the forthcoming quarterly review of its credit policy and would decide on its rates accordingly," Agarwal said.

SBI chairman O P Bhatt, meanwhile, said that interest rates have virtually peaked and if at all there was any hike in the near future it could not be more than 0.25 per cent.

He, however, feared that the hike in EMIs may marginally push up the bank''s non-performing assets (NPAs) on home loans as it may impinge upon the capacity of borrowers to repay.

The government will acquire the Reserve Bank''s 59.7 per cent stake in SBI for more than Rs 35,000 crore.

The government will pick up 31.43 crore equity shares of RBI with a face value of Rs10 each on June 29 for Rs35,351.33 crore, official sources said.

SBI shares closed at Rs1,470.35, up Rs23.15 or 1.6 per cent, on the Bombay Stock Exchange on Thursday. In comparison, the government is buying the stake at a discounted price of about Rs1, 124.7 per share.

The deal will not have revenue implications for the government since RBI is expected to transfer the surplus to the centre during the first half of August.

As per the normal procedure, a bill will be moved in the coming session of Parliament to replace the ordinance.

SBI is also likely to go for stake sale by December. "We are awaiting amendment to the SBI Act... By December, we should be able to go for stake sale," Bhatt said.

The bank will also form a non-banking financial company (NBFC) to manage its insurance and asset management businesses, for which details are being worked out, Bhatt said, adding that the NBFC will subsequently be listed.

Bhatt also said that issue of preferential shares was yet another option for raising capital and this would be also considered once the amendment was through.