New Delhi, Nov. 6 -- After months of muted demand, auto loans appear to have hit the fast lane.

The recent reduction in the goods and services tax (GST) rates on select vehicles to 18% from 28% has revived retail sentiment, sparking an uptick in passenger vehicle sales and demand for loans to finance them, four lenders said.

In September, India's banking industry saw a vehicle loan growth of 7.3% year-on-year (y-o-y), nearly half of the 14% expansion witnessed in the same month a year ago, according to the Reserve Bank of India's monthly sectoral data. Vehicle loan growth has been losing steam through the current financial year. For the first six months of the current financial year, year-on-year vehicle loan growth has been in a range ...