ICICI bank, India's second largest lender, that had gone slow on auto loans amidst rising defaults in the previous two years is considering to resume aggressive lending.

The bank had been the biggest lender for automobile buyers till three years ago but the global economic meltdown coupled with rising bad loans had compelled the bank to go slow on auto loans.

The bank, however, has started showing interest in auto loans. This is primarily due to the demand that passenger car segment witnessed in the last one year. Car sales grew at 16 percent to 10.52 lakhs between April and October 2009.

The bank however would not continue with the same strategy of pushing loans through sales agents. Instead it is planning to tap car and truck dealers to revive auto loans. Recently, a PAN India meet of over 180 car dealers was organised by the bank in order to discuss this issue.

A senior industry executive said that ICICI bank would lend much more and that, in turn, would result in bringing more incremental growth in the passenger car segment.

An industry official said that the bank has doubles the amount kept aside for auto loan disbursements.

The auto loan market, estimated at Rs. 40,000 crore, has witnessed major changes in the last few months. The aggressive strategy adopted by government owned banks have led to a decrease in the market share o private players.

According to sources, ICICI bank is still the largest player in auto finance because of its huge disbursements.

Some sources say that the bank is also planning to raise funds worth $ 700 million through its medium term note program.