Bangalore: State Bank of India (SBI) has announced to increase the interest rates on car loans by 50 basis points. The increased rate will come into effect from tomorrow to bring in line with competing banks. The decision taken up by SBI has been confirmed a senior official of the bank. The car loan rates are 11.25 percent as mentioned at SBI's website. But the rates levied by banks like ICICI Bank, Axis Bank and HDFC Bank is higher at 25-400 basis points, based on amount and tenure of the loan. "A hike of, say, 50 basis points will not make our product costly. Nor will it move the demand to some other player," stated a SBI official to Business Standard. The change of rate for two-wheeler credits is also on the cards. He further added, "This is not a priority segment for us. The bank incurs higher per unit cost due to small ticket size and higher risk of defaults." The auto loan at SBI stood at 22, 025 crore in September 2011, presenting a growth of 25.25 percent over September 2010. A moderate rise is seen in the first six months as its auto loan grew by 1,115 crore and it was 20,910 crore at the end of march 2011. According to the Reserve Bank of India, the bank's annual growth in lending for purchasing of vehicles declined to 17.9 percent in November 2011 from 25.57 percent in the year-ago period. The vehicle loan of banks was 86,877 crore in November 2011. The passenger vehicle industry is seen to grow strongly in last four years, till the last financial year. According to Icra, a rating agency, the industry has shown a growth rate of 16.3 percent in 2007-11. But a slowdown has been faced by the industry since 2011-12, due to rising inflation hardening interest rates and soaring fuel prices. According to Icra, despite of latest model launches, festive season, discounts and promotional schemes by OEMs failed to raise the domestic demand.