Bangalore: State-owned Corporation Bank said it will take a call on revising lending rates next month when its cost of funds might come down.

"...I will be in a position to review my situation (on lending rates) in mid October," Corporation Bank Chairman Managing Director Ajai Kumar told reporters on a query about when the bank would reduce interest rates.

Noting that the cost of fund for the bank was still high, Kumar said the impact of costly deposits would be over by either in September or October which would help in bringing down the cost of fund for the bank.

"The effect of previous hike of deposits will be over by September or October. The cost of funds for the bank is 8 per cent while it used to be 7.5 per cent. As soon as it comes to 7.7 per cent then we will be able to (revise lending rates)," he said.

"Liquidity is still there. It (reduction in lending rate) has to go in a stable manner so that public gets benefit of it," he said.

Bank's base rate is 10.5 per cent, while the benchmark prime lending rate is 15.25 per cent.

Kumar said Finance Minister P Chidambaram had also asked bank chiefs to bring down the interest rate to boost industrial growth.

RBI Governor D Subbarao had expressed hope that banks should lower their interest rates.

However, the bank has already cut down the deposit rate by 0.25 per cent 10 days back, he said.

"There is a still scope to further reduction in (deposit) interest rates. When liquidity is there then I need not to pay higher rate of interest.(Moreover) money market is also softened ," he said.

Corporation Bank is also expecting its deposit rate growth to be lower at 15-16 per cent while attributing slow down in growth to people's preference towards investing in other investment options to fetch higher returns.