The fiscal just ended has seen major banks disbursing Rs. 33, 000 crore as car loans. This is an increase by 18% over the lending of Rs. 28, 000 crore generated in the previous fiscal.

HDFC Bank which is a leding player in the auto loan segment has registered 45 percent growth in this segment amounting to Rs. 11, 000 crore which accounts for one third of the total market share. The bank has booked 25% growth in retail loans last fiscal.

Kotak Mahindra Prime lent Rs. 4, 200 crore which is 90% more as compared to the previous year's disbursal of Rs. 2,200 crore while Axis Bank booked a 405 hike in disbursements to hit Rs. 2, 000 crore.

The huge surge in auto loans can be accounted to the sudden increase in sales of passenger vehicles. The sales in 2009-10 can be figured at 19, 49, 776 units which is much higher than the 15,52,703 units of sales generated in 2008-09.

The Government had reduced excise duties on all catergories by 4% in the beginning of 2009 as a part of the stimulus package which led to lowering of car prices.

"Auto loan disbursement is directly linked to the industry fortune. Last year was really upbeat for car sales and the surge in demand for passenger cars helped auto financiers like HDFC Bank and others to garner a bigger market share," an industry expert said.

Axis Bank, an aggresive player in this market is targeting larger ticket sizes. "Along with consolidating our retail asset business, we have focused more on executive, premium and luxury cars that have helped us to get a better ticket size," Manju Srivatsa, president (retail), Axis Bank, said.

"More than a dozen new launches in the last financial year resulted in nearly 75 per cent of the total cars sold being financed against 60-65 per cent in 2008-09," said an industry expert. "However, as new dealers are spreading across semi-urban areas, the real challenge for all these banks will be to cover the length and breadth of the country."