Mumbai: Interest rates in India may have peaked, State Bank of India chairman O P Bhatt said a day after the US Federal Reserve slashed rates by a whopping 75 basis points.

He, however, refused to say when rates would come down. "I would not like to comment," he said on the sidelines of a conference.

Bhatt said demand for credit was better in the December quarter, though retail loans grew slower than a year earlier.

State Bank of India, India's biggest commercial bank, expects loans growth to pick up in the January-March quarter.

Bhatt said SBI is on track for a planned $4.3 billion rights issue despite the recent volatility in the Indian equities market.

SBI, meanwhile, said it would hold discussions with six of its associate banks, except State Bank of Saurashtra, to decide on their merger with itself, which is opposed by employee unions.

The six associate banks are State Bank of Hyderabad, State Bank of Indore, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore, and State Bank of Bikaner & Jaipur.

"At the moment, we will only talk (with the associate banks)," Bhatt said.

His remarks came after inconclusive talks with union representatives on the issue of merger.

Boards of six associate banks were originally scheduled to meet tomorrow to discuss the issue, but the meeting has now been postponed.

He said, the boards of SBI and State Bank of Saurashtra had approved the merger in August last and the central government's approval was awaited.