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List of Top Ten Banks in India – Each a Good Investment for Different Reasons

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India’s GDP has been growing at a rapid clip over the past decade and is set to grow  at even a faster pace in the coming decade.Financial services penetration of the Indian economy is quite low compared to even other developing economies.With majority of the Indian population mired in poverty,access to banks and financial companies is quite hard as people lack knowledge and education.India’s banks have grown at a rapid pace over the past 2 decades after the financial liberalization.However this growth has still lacked in meeting the massive demand in the need of financial intermediation.This has led to the growth on  non-banking financing companies (NBFCs) and microfinance companies.With the opening of the insurance sector,financial companies in India are set to enter a new growth phase.Major banks in India are either state owned or previous government owned  institutions which have been fully privatized like ICICI and HDFC Bank.Both  the state owned banks and the private banks have managed to grow without throwing the whole system in a crisis like what has happened in the recent past in Europe and USA and in China in the 1990s.Here is a list of the 10 Major Banks in India

1) State Bank of India (SBI) - SBI is India’s Largest Bank which is majority owned by the Government.The Company has a number of Subsidiaries and has been a market outperformer in recent times.Revenues of $22 Billion.The SBI has 7 subsidiaries of which 2 have been merged and  5 are remaining .

  • State Bank Bikaner Jaipur
  • State Bank of Hyderabad
  • State Bank of Mysore
  • State Bank of Patiala
  • State Bank of Travancore

2) ICICI Bank – This is the largest Indian Private Bank with operations in all Financial Services Sectors.The Company has faced a bad time during the Lehman downturn but has recovered well.Revs of $12.5 Billion.ICICI Bank is also strong in almost all sectors of the financial industry and has one of the strongest management teams in the country.Like HDFC Bank majority of the shareholding is held by foreign investors.The company which overextended itself in the 2007-2008 boom has now reduced the size of its risky segments and is again back on the growth trajectory.

3) HDFC Bank – HDFC Bank like Axis Bank has shown remarkable growth in the last few years.The Bank which was founded by India’s largest housing finance company HDFC has assets of around $22 billion.One of the best rated banks in terms of service quality and growth.

4) Punjab National Bank – Punjab National Bank (PNB , is the second largest PSU bank  with about 5000 branches across 764 cities.The Bank like BOB and SBI has shown good growth while at the same time managed to control bad debt.

5) Axis Bank - Axis Bank has been the best performing private bank alongwith HDFC Bank showing excellent growth in topline and bottomline.The Bank has been expanding into insurance and investment banking (acquired Enam).Axis Bank was formerly UTI Bank that  begun operations in 1994.The Bank was promoted jointly by UTI,LIC and other state owned general insurers.One of the best Indian bank stock picks.

6) Bank of Baroda – Bank of Baroda(BoB) is the third largest bank in India and is government owned like SBI and PNB. BOB as it is popularly known has shown excellent growth over the last few years and has managed to control its Non-Performing Asset (NPA).The Bank has good management and manages to earn nice interest spreads.

7) Bank of India -Bank of India (BoI)is Indias 4th largest bank, with  3374 branches, including 27 branches outside India. It was the first bank in India promoted by Indian interests to serve all the communities of India.The stock of the company has not performed as well as it peers post the Lehman crisis.It has seen its market cap decrease relative to its larger PSU Bank peers

8) IDBI Bank - Industrial Development Bank of India Limited(IDBI) is a leading public sector banks . RBI categorised IDBI as an “other public sector bank”. The commercial banking arm, IDBI BANK, was merged into IDBI.This PSU Bank has supposed have great potential and could be the next ICICI in the making.

9) Kotak Mahindra Bank - This is the first NBFC to convert into a bank.The bank has its origins as an investment bank and is still very strong in the capital markets.The Bank and its sister concerns are present in most of the financial segments of the market like Private Equity,Wealth Management,Broking,Investment Banking etc.

10) Yes Bank – Yes Bankwas founded by Ashok Kapur and Rana Kapoor.This bank though still small compared to its larger peers,has come into the top 10 due to its path breaking performance over the last few years in terms of growth.It has managed to set new standards and has broken out from the league of smaller private banks.

Summary

India’s  stock market has a large share of financial companies and this is set to possibly grow as India’s bank grow at around 15-20% as the Indian economy expands by  8-9% every year.The valuations of some banks are not high and make a great investment.Many of these banks have excellent management something which other companies in India sorely lack.Banking scams and instability is much lower in India compared to other countries.One of the best investment sectors in the Indian market

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Abhishek Shah

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