In 2025, India’s banking sector is witnessing one of its biggest waves of global investment ever. From Blackstone’s ₹6,200 crore stake in to Emirates NBD’s $3 billion deal for 60% of , the numbers are staggering.
Add Japanese, Abu Dhabi, and Wall Street investors to the mix, and a clear pattern emerges: the world’s biggest funds are betting big on Indian banking.
What do they see that others don’t?
The answer lies in three simple things: cleaner balance sheets, strong growth potential, and stable regulation.
Before we dive deeper, note that if you want to analyse any listed Indian bank, compare its ratios, or understand its peers, you can explore everything on Finology Ticker, which provides banking-specific ratios, NIM data, CASA ratios, loan book growth, and more, all in one place.
1. Indian Banks Finally Have Clean Balance Sheets
Just a few years ago, Indian banks were struggling under the weight of bad loans. In FY18, (PSBs) had 14.6% gross NPAs, while private banks had around 6%. Fast forward to FY24, and those figures have fallen to 3.3% and 1.9%, respectively.
This transformation didn’t happen overnight; it’s the result of years of strict regulation, faster recognition of NPAs, and a focused clean-up under the RBI’s watch.
For foreign investors, this means predictability. Clean books make profits more reliable, which is exactly what private equity and sovereign funds look for.
How can you check a bank’s report card?
If you’re curious, you can easily look up any bank’s “bad loans” (called NPA) and see how they’ve improved over time. On platforms like Finology Ticker, you can find these specific banking ratios and even compare different banks side-by-side to see who has the cleanest record.
2. RBI’s Policy Shift Made Banks More Profitable
The Reserve Bank of India’s 0.5% repo rate cut in June 2025, coupled with a 1% reduction in CRR (Cash Reserve Ratio), has made money cheaper for banks to lend. Simply put, they can now give out more loans and earn more from interest spreads.
This policy change directly benefits the Net Interest Margin (NIM), one of the most essential banking ratios.
For example, HDFC Bank’s NIM improved to 4.2% in FY25, while ICICI Bank maintained a healthy 4.1%, showing that lending profitability remains strong. Even mid-sized banks like Federal Bank (3.4%) and RBL Bank (3.9%) have maintained solid margins.
How can you track a bank’s profitability?
A bank’s NIM is a key number to watch. You can check the NIM for any bank, like HDFC or ICICI, and see if it’s improving. Finology Ticker has a special section for these banking-specific ratios, making it simple to see which banks are becoming more profitable.
3. Strong Credit Growth and Room to Expand
India’s banking assets are just 94% of GDP.
Compare that to:
- China: 265%
- South Korea: 325%
With only ~40% of Indians entirely banked, the sector has decades of growth ahead.
Credit growth has been consistently strong at 15.5% in FY24, outpacing the country’s 8.2% GDP growth. The retail, housing, and SME lending segments are expanding rapidly.
This long runway is what excites long-term investors like Blackstone and Bain Capital; they’re not betting on quick profits but on India’s multi-decade banking expansion story.
4. Clean Books = Confidence = Capital Flow
Private equity and sovereign wealth funds prefer investing in sectors with transparency and predictability. Indian banks today are showcasing both.
Take Federal Bank, for instance, it has a ₹2.44 lakh crore loan book, GNPA at just 1.8%, and Return on Equity (ROE) of 12.8%. No wonder Blackstone picked up a 9.99% stake at ₹227 per share.
Similarly, SMBC’s $1.6 billion investment in YES Bank (24.99% stake) shows growing foreign trust in private banking recovery stories.
If you’re tracking such ownership trends, Finology Ticker’s Shareholding Pattern section breaks down FII/DII holdings, promoter pledging, and quarterly changes in stake, all visualised for easy understanding.
5. Valuations Are Still Reasonable; For Now
Let’s talk about the numbers everyone cares about: valuation.
Indian banks trade between 1.1x (PSUs) to 2.5x (private banks) on a price-to-book (P/B) basis.
Compare that to other emerging markets like Indonesia (2.9x) or Thailand (2.7x), and Indian banks still look reasonably priced, given the growth outlook.
Emirates NBD’s purchase of RBL Bank at 2.6x book and Blackstone’s Federal Bank deal at 1.7x book reflect confidence that valuations can expand further as profitability improves.
On Finology Ticker, investors can filter banks by P/B, ROE, and NIM using a custom screener, helping find banks that offer value with quality.
6. Regulation Creates Scarcity And Value
The RBI isn’t handing out new banking licences easily. Out of the last 15 applications, 12 were rejected.
This scarcity makes existing banks even more valuable. The only way for global firms to enter India’s banking sector is through acquisitions or equity stakes.
That’s why you see billion-dollar cheques from Blackstone, ADIA, and Warburg Pincus. They’re not just buying banks; they’re buying permanent access to India’s financial ecosystem.
7. What Retail Investors Can Learn
Global funds are betting for the long term, typically 5 to 10 years.
Retail investors should take the same approach. Instead of chasing short-term rallies, focus on banks with:
- Low NPAs (below 2%)
- ROE above 14%
- Stable NIM (above 3%)
- Reasonable P/B valuation (below 2.5x)
These are the fundamentals that separate strong compounders from average performers.
You can apply all these filters directly using Finology Ticker’s Banking Ratios Screener, which uniquely includes metrics like CASA, NIM, GNPA, NNPA, Credit-to-Deposit ratio, and more to help you shortlist healthy banking stocks instantly.
Net NPA 3yr Avg < 2 AND Gross NPA 3yr Avg < 3 AND Net NPA Q1 < Net NPA Q2 AND ROA Y1 > 1 AND NIM Y1 > 3 AND ROE 3yr Avg > 14
Paste the above query in the Finology Ticker Screener, which is one of the best and easiest screeners.
Final Thoughts
The 2025 banking investment wave isn’t a coincidence. It’s the culmination of a decade of clean-up, regulation, and digitisation. With a growing economy, expanding credit base, and a disciplined central bank, India’s banking story is only getting started.
Global giants like Blackstone, Emirates NBD, and SMBC aren’t making speculative bets; they’re making strategic, long-term plays on India’s formalisation journey.
For retail investors, this is a cue to watch, learn, and invest wisely.
And while doing so, use Finology Ticker to explore banking-specific ratios, track major investors, analyse peer data, read updates, and even screen the next Federal Bank or ICICI Bank in the making.
Because when smart money moves, data helps you understand why.
Finology is a SEBI-registered investment advisor firm with registration number: INA000012218.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.