Top 5 Indian Private Banking Stocks with the Lowest NPAs in FY25

There was a time when the gross NPA (non-performing assets) and net NPAs of major banks were around 11% and 6%, respectively.

Today, those numbers have drastically improved, with gross NPAs down to around 2% and net NPAs at just 0.3%.

The significant improvement is due to the government's intervention to improve the banking system through measures such as loan write-offs, recovery drives, and recapitalisation, all of which have helped banks clean up their balance sheets and improve profitability.

So what are NPAs, and why are they important?

NPAs or non-performing assets are loans and advances given by a bank to its customers and are currently in default or close to being in default.

Gross NPAs are the total sum of loans outstanding beyond 90 days, whereas net NPAs are the actual loss that the bank has incurred due to default loans after accounting for provisions that the bank sets aside to cover bad loans.

For a bank, maintaining the NPAs is very crucial as it is through loans and advances that the bank earns interest income and profits.

Hence it is important to monitor a bank's NPAs before making an investment decision.

We have curated a list of private banks that have the lowest NPAs in FY25.

Take a look...

#1 RBL Bank

First on the list is RBL Bank.

RBL Bank is India's leading private sector banks serving over 16 million (m) customers through a network of 561 branches, 412 ATMs, and over 1,400 business correspondents.

The bank's net NPA is the lowest among private sector banks and stands at 0.29% at the end of FY25 as against 0.53% in December 2024. The gross NPA at the end of March 2025 was 2.6% as against 2.92% in December 2024.

RBL has drastically improved its asset quality in the last five years, reducing the net NPA from 2.1% in FY21 to 0.29% in FY25.

In just one year, the bank's advances grew 10% year-on-year (YoY), led by strong growth in retail advances and secured retail advances.

The bank has achieved all this while maintaining an average net interest margin of 5.2% in the last five years.

In the last five years, the net interest income and net profit have grown at a compound annual growth rate (CAGR) of 9.3% and 6.3% respectively. The return on equity (RoE) stands at 4.5% at the end of March 2025.

For FY26, the management expects the advances to grow at 16-17% led by secured retail, and wholesale advances.

However, with respect to unsecured loans segment, it remains cautious due to a complex macro environment and elevated household leverage.

It also expects the net interest margin and pre-provision operating profit to remain muted due to rate cuts and lagged deposit pricing.

In 2025, the shares of RBL bank have grown by over 34% due to improving asset quality and strong quarterly results.

To know more, check out RBL's financial factsheet and latest quarterly results.

RBL Bank Financials (2020-2025)

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025
Net Interest Income (Rs m)	41,364	42,966	49,980	60,437	64,630
Net Interest Income Growth (%)		3.9%	16.3%	20.9%	6.9%
Net Interest Margin (%)	5.3%	5.0%	5.2%	5.5%	4.9%
Net Profit (Rs m)	5,295	-1,661	9,195	12,599	7,170
Net Profit Margin (%)	6.1%	-2.0%	9.5%	10.2%	5.1%
Net NPA (%)	2.1%	1.3%	1.1%	0.7%	0.29%
Return on Equity (RoE) (%)	4.2%	-1.3%	6.8%	8.6%	4.5%

Source: Equitymaster

#2 Kotak Mahindra Bank

Second on the list is Kotak Mahindra Bank.

Kotak Mahindra Bank is the fourth largest private sector bank in terms of deposits and advances. It also has a sizable market share in its securities broking business and asset management business.

The bank's net NPA stood at 0.31% at the end of March 2025, down from 0.41% in the December 2024 quarter. Its gross NPAs also reduced from 1.5% in December 2024 to 1.42% in March 2025.

The bank has maintained its net NPA below 1% in the last three years primarily due to its rigorous loan evaluation and diversified loan portfolio. Its loan book is dominated by secured loans, ensuring the bank has enough collateral against any defaults.

In the last five years, the interest income, and net profit grew by a CAGR of 7.4% and 17.2% respectively and the net interest margin averaged at 5%.

For FY26, the management is expecting a 1.5-2x nominal growth in its assets, and continues to focus on customer-centricity, technology, and cross-selling.

Overall, the management is positive about its growth but is aware of the multiple headwinds such as microfinance stress, unsecured retail delinquencies and global uncertainties that might hinder its progress and hence is taking several measures to tackle them.

In 2025, the bank's shares have risen by 17% due to removal of RBI's restrictions on its digital banking initiatives, and strong quarterly results.

To know more, check out Kotak Mahindra Bank's financial factsheet and latest quarterly results.

Kotak Mahindra Bank Financials (2020-2025)

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025
Net Interest Income (Rs m)	198,533	221,871	277,399	336,694	283,420
Net Interest Income Growth (%)		11.8%	25.0%	21.4%	-15.8%
Net Interest Margin (%)	4.5%	4.7%	5.4%	5.3%	5.0%
Net Profit (Rs m)	99,902	120,894	149,250	182,132	221,260
Net Profit Margin (%)	30.4%	35,80%	35.4%	32.4%	33.6%
Net NPA (%)	1.2%	0.7%	0.4%	0.4%	0.31%
Return on Equity (RoE) (%)	11.8%	12.4%	13.3%	14.0%	15.2%

Source: Equitymaster

#3 Axis Bank

Third on the list is Axis Bank.

Axis Bank is India's third largest private sector bank in India in terms of loan book, and fourth largest credit card issuer with a domestic network of over 5,800 branches.

The bank's net NPAs stood at 0.33% at the end of March 2025, against 0.35% in December 2025. The gross NPAs also reduced from 1.46% in December 2024 to 1.28% in March 2025.

Axis Bank has consistently maintained a low gross NPA and net NPA reflecting its robust asset quality and effective risk management strategies.

It also maintained a healthy provision coverage ratio, has a diversified loan book, and undertakes timely write-offs to clean its balance sheet and focus on recoverable assets.

In the last five years, it saw strong growth in its net interest income (12.8% CAGR) and net profit (29.7%) and maintained a healthy average net interest margin of 3.8%.

Although the management hasn't given guidance for FY26, it's confident about growth in deposits and advances. It's also positive about maintaining asset quality due to a robust risk management strategy.

The shares of Axis Bank have grown by 13% in 2025 on account of strong sectoral and regulatory tailwinds.

To know more, check out Axis Bank's financial factsheet and latest quarterly results.

Axis Bank Financials (2020-2025)

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025
Net Interest Income (Rs m)	297,700	339,234	440,592	513,683	543,480
Net Interest Income Growth (%)		14.0%	29.9%	16.6%	5.8%
Net Interest Margin (%)	3.5%	3.5%	4.0%	4.1%	4.0%
Net Profit (Rs m)	71,955	141,193	108,185	263,862	263,730
Net Profit Margin (%)	11.2%	20.5%	12.4%	23.4%	22.1%
Net NPA (%)	1.1%	0.7%	0.4%	0.3%	0.33%
Return on Equity (RoE) (%)	6.9%	12.0%	8.4%	16.9%	16.5%

Source: Equitymaster

#4 ICICI Bank

Next on the list is ICICI Bank.

The bank is one of the three systemically important banks in India with a 7% market share in the banking sector. it is also the second largest private sector bank in India with close to 7,000 branches and over 16,000 ATMs.

The bank's net NPAs stood at 0.39% of the total advances in FY25. Gross NPAs came in lower at 1.67% in the March quarter, from 1.96% in the preceding quarter.

The bank has improved its asset quality drastically, with the net NPAs falling from 2.29% in FY19 to 0.39% in FY25.

What's notable is that the bank's net NPAs have stayed around 2% in the last decade with an exception in the years 2017 and 2018 where it saw high additions to NPAs in its corporate and small and medium enterprises loan portfolio.

The net interest margin hs also increased every year from 3.4% in 2019 to 4.3% in 2025. This has culminated into a strong profitability, with the net profits reporting a 5-year CAGR of 20.8%.

The bank's RoE stands at 18% as of March 2025.

ICICI Bank is positive about its growth in profits despite macroeconomic uncertainties and continues to invest in technology, distribution and franchisee expansion to grow its business.

In 2025, the shares of ICICI Bank have risen by 14% on account of healthy growth in loan book, strong asset quality, and resilient financials.

To know more, check out ICICI Bank's financial factsheet and latest quarterly results.

ICICI Bank Financials (2020-2025)

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025
Net Interest Income (Rs m)	465,036	542,402	705,234	854,078	811,650
Net Interest Income Growth (%)		16.6%	30.0%	21.1%	-5.0%
Net Interest Margin (%)	3.7%	4.0%	4.5%	4.5%	4.3%
Net Profit (Rs m)	183,843	251,101	340,366	442,564	472,270
Net Profit Margin (%)	20.6%	26.3%	28.1%	27.7%	29.2%
Net NPA (%)	1.1%	0.8%	0.5%	0.4%	0.39%
Return on Equity (RoE) (%)	11.7%	13.8%	15.9%	17.4%	18.0%

Source: Equitymaster

#5 HDFC Bank

Last on the list is HDFC Bank.

HDFC Bank is India's largest private sector bank by assets, the second largest bank in India and a market leader in almost every asset category.

For FY25, the bank's net NPA's stood at 0.4% of total advances. Its gross non-performing assets (NPA) ratio also improved stood at 1.33% as against 1.4% in December 2024.

It's noteworthy that the bank's net NPAs have never crossed 0.5% of loans primarily because it maintains enough provisions to cover its bad assets. In terms of its financial performance, the bank has reported more than 20% YoY growth every quarter for over 40 quarters.

Its net interest income and net profit have grown at a healthy CAGR of 12.1% and 16.2% respectively in the last five years, and the net interest margin averaged at 3.8%.

For FY26, the management expects to grow at market rate with a focus on gaining market share in deposits and advances.

In 2025, the shares of HDFC Bank have grown by 9% on account of strong Q4 results.

To know more, check out HDFC Bank's financial factsheet and latest quarterly results.

HDFC Bank Financials (2020-2025)

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025
Net Interest Income (Rs m)	693,048	773,521	929,741	1,295,105	1,226,700
Net Interest Income Growth (%)		11.6%	20.2%	39.3%	-5.3%
Net Interest Margin (%)	4.1%	4.0%	4.1%	3.5%	3.5%
Net Profit (Rs m)	318,332	380,528	459,971	640,620	673,500
Net Profit Margin (%)	24.8%	28.0%	26.9%	22.6%	21.8%
Net NPA (%)	0.4%	0.3%	0.3%	0.3%	0.40%
Return on Equity (RoE) (%)	15.2%	15.4%	16.0%	14.1%	14.4%

Source: Equitymaster

Conclusion

For a bank maintaining low NPAs is very crucial. This is because low NPAs indicate that the bank has healthy loan book.

A healthy loan book, in turn, means the loans will be paid back on time, ensuring there are no defaults and profitability is maintained.

From an investment perspective, picking banks with low NPAs translates into a more stable and predictable earnings stream, which is a vital consideration when seeking reliable returns.

However, one must ensure that the bank is consistent with its performance with respect to net interest margin, profitability, and NPAs over time. Moreover, past performance is not always indicative of future results. Even banks with a history of low NPAs can face unexpected challenges.

Continuous monitoring of a bank's performance and adapting to changing conditions is necessary for making informed investment decisions.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...