State Bank of India (SBI) today said it will raise interest rates on fresh medium- and long-term deposits by 25-50 basis points from June 1 to garner resources for supporting business growth. But other public sector players ruled out an immediate hike, saying margins will come under pressure.

SBI has revised rates for two to three years' maturity basket from 8.5 per cent to 8.75 per cent. The new rate for the three to five years slab will be 8.85 per cent aganist the existing rate of 8.5 per cent. For the five to 10 years bracket, the rate has been revised to 9 per cent from 8.5 per cent at present, SBI said in a statement today.

The country's largest commercial bank had revised term deposit rates last month and the latest move is also aimed at garnering more long-term deposits for infrastructure lending and home loans, a bank executive said.

While Bank of Baroda Chairman and Managing Director M D Mallya ruled out any immediate revision, his counterpart at New Delhi-headquartered Punjab National Bank said his bank's asset liability committee will review interest rates, which are stable at the moment.

"There is no question of raising rates at the moment as margins will come under pressure," added Andhra Bank Chairman and Managing Director K Ramakrishnan.

Bankers said the latest round of revision by SBI is likely to impact its net interest margin (NIM), which was under pressure in 2007-08, dipping to 3.07 per cent from 3.41 per cent in 2006-07. A senior SBI executive, however, said the impact will be low by one-two basis points.

With strong competition among banks to mop up funds, SBI's cost of deposits rose 80 basis points to 5.6 per cent during 2007-08, putting pressure on its NIM.

The bank's deposits grew 23.4 per cent to Rs 4,35,521 crore at the end of March 2008, with current and savings accounts (CASA) maintaining its share at 43 per cent. SBI's share in the deposits market moved up from 14.8 per cent at the end of March 2007 to 15.4 per cent at the end of March 2008.