India's second largest bank, ICICI Bank, has hinted at a revision of its interest rates in the event of a war between US and Iraq.

However, ICICI Bank CEO, K V Kamath said the bank would maintain its stable to downward bias for interest rates in case things are normal.

"We would like to see that interest rates are stable with a downward bias if the Middle East does not erupt. We would like to wait and watch," Kamath said.

Some of the banks are contemplating revision in lending and deposit rates in apprehension of the war and rise in yields on gilts recently. The yields on bench-mark 10-year government papers surged to 6.5 per cent in the last fortnight.

Market players also apprehend that interest rates have bottomed out and there might be upward movement now.

But Kamath said the reversal of rates may be due to 'externalities.'

ICICI Bank recently slashed housing loan rates to all-time low of about 8.5 per cent for short term loans.

The bank had brought down term deposit rates by 0.25 per cent in January to 5.5-6.25 per cent for maturity periods ranging from 91 days to 10 years.