Banks are looking to expand their vehicle finance portfolios to capitalise on the improving demand for automobiles following the reduction in GST rates.

Before GST cuts, demand for automobiles had slowed, with the rise in bank credit for vehicle loans coming down to 8.7% in August, from 8.9% in July, according to the Reserve Bank of India’s sectoral deployment data.

The slowdown can primarily be attributed to lower demand, higher delinquencies and uncertain resale values in the electric vehicles segment. But with the GST rate rationalisation, bankers have turned optimistic on this segment as they believe the reforms have improved consumption as products become cheaper.

“As we look at the numbers, post September 22, demand has come back across most segments of our vehicle finance b

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