"Banks give 90 percent finance to customers for buying of cars. However, to cut competition and gain market share, we stretch up to 95 percent. Banks also run schemes with dealers where they give 100 percent finance on certain models and also fund the insurance cost which is then bundled in the EMI," said the direct sales agent of a private sector bank. Banks give 100 percent finance for few selected cars like Maruti Swift Desire, Wagon R, Maruti Alto, Ford Ecosport, Nissan Terrano and Renault Duster. According to a sales agent this new offer is for customers with income of over Rs1 lakh.

Once the car leaves a showroom its value starts depreciating thus the auto finance does not work the same way as home and gold loans, said Shinjini Kumar, director at PriceWaterhouseCoopers. It is, therefore, important that banks have good appraisal processes," Kumar said. Due to poor growth in corporate, credit banks are aggressively pushing their consumer business.

Certain private sector banks like ICICI Bank and HDFC Bank have seen their retail book growth up to 20 percent each year. ICICI Bank's total advances book increased by 17 percent to 3,38,703 crore with retail assets growing 23 percent. Axis Bank in the March quarter saw its advances grow by 17 percent per year, driven by growth in retail loans at 31 percent.