Indian banks may have scared off some investors with the sector's bad loan problem, but financial experts told CNBC they're positive on Indian lenders.
That's thanks to the government's economic management, they said, adding that it was still important to differentiate within the sector.
On the one hand, India's private banks offer "strong" returns on investment, Rashmi Gupta, emerging markets multi-asset portfolio manager at J.P. Morgan Private Bank, told CNBC. "Many of them are considered well run with capable management teams," she added.
Meanwhile, India's state banks are largely plagued with high levels of stressed (non-performing, restructured or rolled-over) loans. Those assets amounted to 8.25 trillion rupees ($130 billion) for India's 21 state lenders at the end of September 2017, Reuters reported earlier this year.
Still, the overall stock of bad loans in the Indian banking system ticked slightly down from 9.5 trillion rupees ($149.43 billion) in June last year to 9.46 trillion rupees ($148.71 billion) at the end of September, Reuters reported.