Widely read:
AI-generated image
The Reserve Bank of India (RBI) surprised the market with a higher-than-expected repo rate cut of 50 bps on June 6, 2025 and a 100 bps cut in the cash reserve ratio (CRR), which is set to significantly boost liquidity in the banking system.
For investors, this means more capital flowing into the banking sector, potentially driving higher profitability and growth. Hence, we have spotlighted three banks that could benefit from the RBI’s liquidity push.
These banks are backed by healthy fundamentals and strong return ratios while also trading at appealing valuations. Let’s take a quick glance at the three banks and their growth and quality numbers below:
Jana SFB, headquartered in Bengaluru, is a leading player in the small finance banking sector. Despite a strong focus on serving underbanked and underserved populations, the bank has been actively diversifying its loan book by increasing its secured advances portfolio including microfinance, two-wheeler loans, affordable housing, and MSME loans with 60 per cent of its loan book being secured as of FY24. The bank had modest asset quality with its gross NPA ratio at 2.5 per cent as of March 2025.
| Stock | 5-year NII growth (pa%) | 5-year avg ROE (%) | 5-year avg ROA (%) | P/B |
|---|---|---|---|---|
| Jana SFB | 37.24 | 12.11 | 0.84 | 1.22 |
| NII is net interest income ROE is return on equity ROA is return on assets Median P/B not given as the stock was listed in 2024 |
||||
AU SFB, initially a vehicle financier, has grown to become the largest player in the small finance banking sector, with a loan book exceeding Rs 1,00,000 crore. The bank’s strategy focuses on secured loans, offering it stability, even during periods of slowdown. Its loan portfolio is well-diversified, with a predominant focus on secured retail loans such as vehicle loans, micro business loans, and microfinance. These segments are expected to constitute nearly 75 per cent of its portfolio by 2027. Its gross NPA ratio was 2.28 per cent as of March 2025.
| Stock | 5-year NII growth (pa%) | 5-year avg ROE (%) | 5-year avg ROA (%) | P/B | 5-year median P/B |
|---|---|---|---|---|---|
| AU SFB | 33.22 | 17.21 | 1.9 | 3.12 | 4.36 |
HDFC Bank is one of India's largest private sector banks. Its key segments include retail loans, corporate loans, and other financial products like insurance and wealth management. The bank’s retail loan book, which includes mortgages (around 30 per cent of the total loan book), forms a significant part of its revenue. As of FY25, HDFC Bank’s total loan book stands at Rs 27.7 trillion, with robust growth in both retail and wholesale segments. The bank's asset quality remains healthy with a gross NPA ratio of 1.33 per cent as of March 2025.
| Stock | 5-year NII growth (pa%) | 5-year avg ROE (%) | 5-year avg ROA (%) | P/B | 5-year median P/B |
|---|---|---|---|---|---|
| HDFC Bank | 20.49 | 16.93 | 1.94 | 2.93 | 3.21 |
The top-rated trio
| Company | Stock Rating | Quality Score (out of 10) | Growth Score (out of 10) | Valuation Score (out of 10) | Momentum Score (out of 10) |
|---|---|---|---|---|---|
| AU Small Finance Bank | ★★★★★ | 9 | 8 | 6 | 9 |
| HDFC Bank | ★★★★★ | 9 | 8 | 6 | 9 |
| Jana Small Finance Bank | ★★★★ | 8 | 4 | 7 | 6 |
Want to find the complete list of our top-rated banks across all market categories? Check out our Stock Screen and find their ratings, returns and valuations all in one place.
Also read: RBI cuts repo rate to 5.5%. This may be the last for a while
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
