Increasing bank rates will break the social contract between Australian banks and the public, warned Greens MP and banking spokesman Adam Bandt.

"If the ANZ or other banks hike their rates, they risk breaking their social contract with the Australian people," he said.

Bandt said he would move ahead with legislation to "rein in the banks" following ANZ Bank's announced that it will determine lending interest rate independent of the Reserve Bank of Australia. The RBA decided to retain the benchmark interest rate this week at 4.25 per cent at its first policy rate meeting for 2012.

"The treasurer should get behind the Greens' legislation for banks to provide mortgages that track RBA rates," he said.

"The banks should no longer expect the Australian public and government to generously back them in a crisis unless they give something back. The IMF has said banks could pay a "too-big-to-fail" levy in return for deposit and funding guarantees, and we agree."