ICICI bank is one of the largest private lenders in the country, but higher costs of funds have forced the bank to increase its interest rates on home and other loans by 25 basis points. The bank has basically taken the decision to increase its benchmark rates.

The decision has increased the interest rates on ICICI Bank's home loans by 25 basis points than its rivals HDFC and State Bank of India, who are offering same loans at 10.25%. The bank has directly stated the hike in its cost of funds as the reason behind the increase. This increase in the base rate will be effective from July 4. Post calculating the effect, it was noted that the 25 basis points increase in lending rates would push up the equated monthly installment on a 20-year, Rs 30 Lakh home loan by over Rs 500.

ICICI Bank has become the first major lender, who has replied to RBI's policy measures as many lenders are holding back a hike over fears that credit growth may falter.

Regarding the situation, Krishna Kumar, Managing Director of State Bank of India, said, in an interview to ET Now, on Thursday that the bank will soon be discussing the issue with its asset liability committee to take an early view on interest rates.