With the sharp growth seen in the retail credit segment during the festive season, Banks are expecting that the growth will continue in the fourth quarter as well. Banks continue to promote the retail credit segment hoping that the central bank will reduce rates during the third monetary policy review on January 29th.

Mr. M S Raghavan, Executive Director of Bank of India said, "The credit growth in retail in these three months (October-December) has been impressive. We expect this to continue. Generally speaking, we have a lot of headroom for the growth to continue. We expect the growth to continue for at least three more months".

He further added, "The thrust of banks on retail credit is there. There is also a great expectation that interest rates will come down further. For this fiscal, our retail credit growth (target) is 30 per cent and for (meeting) that, the fourth quarter is very crucial".

The decision by the banks to cut rates on home and car loans during the festive season helped them to get good business, with the retail credit growth of 16.3 per cent year-on-year basis till November. The banks had also waived off the processing fees to drive retail credit growth.

Retail vehicle loans grew 25.8 per cent in November, compared with a growth of 22.2 per cent in October, while home loans grew 13.2 per cent in November against 12.1 per cent the previous month.

Mr. A L Daultani, executive director, Corporation Bank, said: "We have seen a retail credit growth in the quarter ended December 31, which was so impressive that we had not seen this kind in the last three years."