Easy bank credit has in recent years fuelled a market also driven by a booming economy, new model launches, deficient public transport and rising oil prices that prompted commuters to buy fuel-efficient bikes and scooters.

Sales growth in the market, projected to reach 10 million units by 2010, has skidded in the past four months as banks closed off the loan tap to curb a rise in defaults, said K.N. Radhakrishnan, president of TVS Motor Company, India's third-biggest maker of two-wheeled vehicles.

"The non-availability of finance is driving the sector," Radha-krishnan told reporters after TVS introduced a new premier model, the Apache RTR, targeted at young racing enthusiasts.

"Gone are the days when a buyer could go to a showroom, get an instant loan without even showing proof of income and drive off with a bike," Radhakrishnan said.

India's two-wheeler market grew by 11.42 percent during the year ended March.

But sales of scooters and motorcycles -- two-thirds of which are financed by banks -- dropped in June for the fourth month in a row, hurting sales at the biggest manfacturers including Hero Honda, Bajaj Auto and TVS.

At TVS, sales last month dropped 15 percent to 97,984 units.

Banks have raised loan rates by as much as 2.5 percentage points since the start of 2007.