The cut in the interest rates by banks in home loan segment has brought cheer for banks as it has recorded a higher month-on-month growth in the festive season this year as compared to the growth recorded last year.

The growth in outstanding home loan was Rs 7200 crore on a month-on-month basis in October as compared to growth of Rs 3046 crore in October 2011. Home loan contribute the largest segment of retail loan for banks.

The same case was with the car loans as banks reduced interest rates. The growth in outstanding car loans was Rs 1300 crore on a month-on-month basis in October as compared to Rs 1107 crore in October, 2011. The growth in the vehicle loan segment was despite the fact that fuel prices rose tremendously.

Mr. D Sampath, head retail banking, Federal Bank said, "Growth in home loans and vehicle loans continued even in November and is expected to continue even in December".

The banks have also waived off processing charges to boost the growth of retail loan segment.

The entire outstanding retail loans segment of the industry grew by Rs 14900 crore on a month-on-month basis in October as compared to growth of Rs 7627 crore in October 2011. As the corporate credit continues to be sluggish, banks are focusing more on retail loans.