Leading lenders have seen a huge demand in retail loans over the previous seven months of the fiscal. Rising income combined with increasing demand for homes and cars have boosted retail lending by banks.

Banks like HDFC and Axis have seen the best growth in assets in the month of October. "October has been the best-ever month for us on the retail assets side, surpassing even the earlier high recorded in June last year. Since April, we have been seeing a month-on-month increase, which was never the case before," said Pralay Mondal, country head, retail assets & credit cards, HDFC Bank. He added that the secured loan business had picked up very well and the unsecured business was also picking up.

HDFC Bank disbursed retail loans worth Rs 3,000 crore in the month of October as compared to Loans worth Rs. 1,800 crore in April. In June 2008, the amount of loans disbursed was Rs. 2,700 crore but amidst the global financial crisis banks had become more cautious while lending.

HDFC Bank's retail loan book consists of 54.4% of the total loans as on September 2009. The bank claims that it has the largest share (37%) in the auto loan market, followed by the State Bank of India.

ICICI bank, the country's second largest lender has also seen a pick in demand for secured loans. Axis Bank also did well in terms of loan disbursements. "Our disbursements last month were around Rs 900 crore against around Rs 500 crore six months before. We have seen a sharp surge in both home loans and auto loans,"said Manju Srivatsa, president, retail banking, Axis bank.

Public sector banks have also seen a rise in retail lending, especially in home loan segment. MD Mallya, chairman of Bank of Baroda, said that the bank had witnesses a home loan growth of 25% year-on-year.