Best Banking Stocks in India 2025

The banking sector is the backbone of any economy, driving financial stability, credit growth, and innovation. With India's expanding economy, digital transformation, and increasing financial inclusion, banking stocks have emerged as a lucrative investment avenue. These stocks offer a blend of stability and long-term growth potential, making them a key choice for both conservative and growth-oriented investors.

In this article, let us discuss the best banking stocks in India that you can consider adding to your portfolio. So let’s get started!

What are Banking Stocks?

Banking stocks in India represent shares of banks listed on stock exchanges, including public sector banks (PSBs), private sector banks, and small finance banks (SFBs). These stocks are influenced by factors like interest rates, credit growth, RBI regulations, and economic conditions. Investors consider banking stocks attractive due to their strong regulatory framework, stable earnings, and direct linkage to economic growth

Banking Industry Overview

Currently, The Indian banking system consists of 13 public sector banks, 21 private sector banks, 44 foreign banks, and 12 Small finance banks, making it a crucial part of the growing Indian economy. Additionally, the total number of micro ATMs in India reached 15,17,580 as of June 2024.

The sector has seen significant growth with the introduction of payment banks, small finance banks, and neo-banking, alongside initiatives like Pradhan Mantri Jan Dhan Yojana and Post Payment Banks, which are driving financial inclusion and credit growth. Further, Key reforms like digital payments, fintech growth, and the rise of NBFCs, have strengthened the industry.

In 2024, India's total banking assets reached $3.13 trillion, with public sector banks accounting for 59.53% of this figure. According to the Reserve Bank of India, the deposits of scheduled banks increased by Rs. 2.11 lakh crore (approximately $2,544 billion) as of July 12, 2024. Additionally, there has been significant growth in digital transactions, with India making up 46% of global digital payments. Furthermore, 602 banks are actively participating in the UPI ecosystem, highlighting the rapid shift towards digital banking.

List of Best Banking Stocks in India by Market Capitalization

Here is a detailed list of the top bank stocks in India, ranked by market capitalization:

List of Best Undervalued Banking Stocks

Comprehensive list of the top undervalued banking stocks in India ranked by P/E ratio.

List of Best PSU Bank Stocks

Here’s a ranking of the best PSU bank stocks in India by market capitalization:

Overview of the Best Banking Stocks in India

Now that we know the best banking stocks in India, let’s explore an overview of these companies to understand their strengths and weaknesses.

HDFC Bank:

Incorporated in August 1994, Over the years, HDFC Bank has grown to become India's largest private sector bank by assets and ranks as the world's tenth-largest bank. As of 10th March 2025, the bank has a market capitalization of Rs. 12,90,742 crore, making it the third-largest company on the Indian stock exchanges. 

As of December 2024, HDFC has established an extensive distribution network that includes 9,143 branches and 21,049 ATMs across 4,101 cities and towns. In FY24, the bank achieved impressive profit growth, with a compounded annual growth rate (CAGR) of 23% over the past five years. During the same financial year, the company reported a return on assets (ROA) of 1.98% and a gross non-performing asset (NPA) ratio of 1.24%.

ICICI Bank

ICICI Bank, established in 1994, is India’s second-largest private sector bank, offering a diverse range of financial products and services, in diverse sectors, including insurance, and primary dealerships through its subsidiaries. As of 10th March 2025, ICICI has a market capitalization of Rs. 8,58,061 crore, 

As of December 2024, the bank is supported by a network of 6,742 branches and 16,277 ATMs & CRMS, with 30% located in metropolitan areas. As of FY24, the bank achieved an impressive 60% CAGR in profit over the past five years. For FY24, its return on assets (ROA) stood at 2.37%, with gross NPA standing at 1.23%.

State Bank of India

Established in 1955, SBI is India’s largest and oldest public sector bank, with an asset base of over Rs. 61 trillion. SBI serves over 50 crore customers through more than 22,740 branches and 65,000 ATMs and maintains a global presence with 241 offices in 29 foreign countries.

As of 10th March 2025, SBI has a market capitalization of Rs. 6,50,025 crore. In FY24, the company delivered a robust profit growth of 99% CAGR over the past five years and has reported an ROA of 1.04% with a Gross NPA of 2.24%. 

Kotak Mahindra Bank

In 2003, the NBFC Kotak Mahindra Finance was granted a banking license and was converted into Kotak Mahindra Bank. As of 10th March 2025, the bank has a market capitalization of Rs. 3,81,542 crore making it India’s fourth-largest private sector bank by market capitalization.

As of December 2024, Kotak operates a vast distribution network with 2,068 branches( Group 5,510 ) and 3,337 ATMs, including international branches in Dubai and GIFT City. In FY24, the company delivered a profit growth of 20% CAGR over the past five years and has reported a strong ROA of 2.66% with a Gross NPA of 1.4%.

Axis Bank

Incorporated in December 1993, Axis Bank is India's third-largest private bank with a market capitalization of Rs. 3,20,848 crore as of 10th March 2025. As of December 2024, the bank also holds a 13.7% market share in credit cards and operates an extensive network of 5,706 branches across more than +2,500 cities.

In FY24, the company delivered a profit growth of 39% CAGR over the past five years and has reported an ROA of 1.84%, with Gross NPA standing at 1.43%.

Bank of Baroda

Headquartered in Vadodara, Gujarat, Bank of Baroda is a public sector bank owned by the Indian government. It ranks among the top five public sector banks in India by asset size and is one of the country's largest banks. As of 10th March 2025, the bank has a market capitalization of Rs. 1,05,548 crore. 

As of December 2024, the bank operates through a vast network of 8,243 branches and 9,182 ATMs and also has 91 overseas branches across 17 countries. In FY24, the bank delivered an excellent profit growth of 77% CAGR over the past five years and has reported an ROA of 1.17% with a Gross NPA of 2.92%.

Punjab National Bank

Founded in May 1894, Punjab National Bank is the second-largest public sector bank in India after SBI in terms of business volume. As of 10th March 2025, the bank has a market capitalization of Rs. 1,01,849 crore. As of December 2024, PNB operates a vast distribution network with 10,168 branches and 12,034 ATMs, including international branches in Dubai and GIFT City.

In FY24, the bank has delivered a profit growth of 24% CAGR over the past five years and has reported a ROA of 0.54% with a Gross NPA of 5.73%.

Union Bank of India

Union Bank of India is the fifth largest public sector bank in India serving over 153 million customers. As of 10th March 2025, the bank has a market capitalization of Rs. 87,198 crore. Union Bank operates a vast distribution network with 8,574 branches and 9,087 ATMs, including Overseas branches in Dubai and Sydney.

In FY24, the bank has delivered an excellent profit growth of 46% CAGR over the past five years and has reported an ROA of 1.03% with a Gross NPA of 4.76%.

Canara Bank

Established in 1906, Canara Bank is an Indian public sector bank that was nationalized in 1969. As of 10th March 2025, Canara Bank has a market capitalization of Rs. 74,778 crore. As of December 2024, the bank has a vast distribution network with 10,000 branches and 13,423 ATMs, including Overseas branches in London, Dubai, and New York.

In FY24, the bank has delivered a massive profit growth of 91% CAGR over the past five years and has reported an ROA of 1.01% with a Gross NPA of 4.23%. 

Indian Bank

Established in 1907, Indian Bank is a medium-sized public sector bank. Following the merger announcements of other public sector banks, Indian Bank is now the seventh-largest public sector bank by deposits and advances.

As of 10th March 2025, the bank has a market capitalization of Rs. 68,484 crore and operates an extensive network of 5,877 branches and 5,224 ATMs all over India as per Q3FY25. In FY24, the bank has delivered a robust profit growth of 86% CAGR over the past five years and has reported an ROA of 1.07% with a Gross NPA of 3.95%.

Indian Overseas Bank

Based in Chennai, the Indian Overseas Bank (IOB) is a public sector bank and was one of the 14 banks that the Indian government took control of during the country's nationalization process. 

As of 10th March 2025, the bank has a market capitalization of Rs. 82,074 crore and operates a vast distribution network with 3,322 branches and 3,503 ATMs as per Q3FY25, including 4 Overseas branches in Singapore, Hong Kong, Bangkok, and Colombo. In FY24, the bank has delivered a profit growth of 22% CAGR over the past five years and has reported an ROA of 0.81% with a Gross NPA of 3.10%.

Benefits of Investing in Banking Stocks

• Linked to Economic Growth: Banking and other financial institutions' growth is closely related to the country’s economic growth. As India’s economy grows, the financial needs of businesses and individuals increase, leading to increased credit demand and capital flow, ultimately benefiting banks and financial institutions.

• Consistent Demand for Banking Services: Regardless of economic conditions, individuals and businesses require banking services such as loans, deposits, and payments. This ensures that banks maintain a steady stream of revenue, supporting long-term stock performance.

• Heavily Regulated: Strict RBI regulations ensure risk management, capital adequacy, and asset quality, making banking stocks resilient and safer for long-term investment.

Risks of Investing in Banking Stocks

• Regulatory Changes: Banks and other financial institutions are heavily influenced by regulatory changes. Changes in cash reserve ratio (CRR), capital adequacy ratio, and stricter lending rules directly impact a bank’s lending ability, interest margins, and overall earnings.

• Interest Rate Fluctuations: Banks make money primarily through borrowing at low interest rates and lending at a higher interest rate. When interest rates rise, borrowing and lending become more expensive, resulting in reduced loan demand and credit growth. 

• Economic Uncertainty: Banking stocks are very sensitive to changes in economic conditions. In economic downturns, declining credit demand and delayed repayments negatively impact banks' earnings and stock performance.

• Default Risk: Banks earn primarily through lending and charging interest on that; however, if the banks fail to recover the loan or interest, they risk having higher non-performing assets (NPAs), reducing their income and increasing provisioning costs, ultimately affecting their stock price.

How to Invest in Banking Stocks

Investing in stocks requires thorough research, risk assessment, and the right platform to make informed decisions. This is where Rupeezy simplifies your investment journey.

Step 1: Open Trading Account: Download the RUPEEZY app from the App Store for Mobile or Click on this link to open a demat account through the official Rupeezy website.

Step 2: Fill in Personal Details: Enter your personal information, including name, address, PAN number, and contact details.

Step 3: Upload Documents:  Upload necessary documents like Aadhar card, PAN card, and bank statements for KYC verification.

Step 4: eSign the Form: After uploading the necessary documents, Complete the process by electronically signing the application form.

Step 5: Verification: Rupeezy’s onboarding team will verify your details, and upon successful verification, your Demat/Trading account will be activated. You will receive a mail that includes your login credentials, like the Client Code, and other details.

Step 6:Set the Password: After receiving the client code, open the app and set your password to secure your data and activities.

Step 7: Start Trading: Once your account is active, you can start trading or investing through the broker’s platform.

Conclusion

Banking stocks play a pivotal role in the financial markets, offering investors a blend of stability, and growth potential. As the backbone of the economy, banks thrive in periods of economic expansion, benefiting from rising credit demand, technological advancements, and policy-driven reforms. While these stocks can be influenced by interest rate fluctuations and economic cycles, the sector's resilience and continuous evolution make it a compelling choice for long-term investors. With the Indian banking industry undergoing rapid digital transformation and financial inclusion efforts, the future of banking stocks remains promising for those looking to capitalize on the sector’s growth trajectory.