Banking and PSU funds in India

20 live funds in the Banking and PSU category, ordered by 5-year return, highest first; UTI Banking & PSU Debt Fund leads. Funds younger than five years follow by name. Returns are for the plan each fund's page leads with, Direct where the fund has one, to each fund's latest NAV, the newest of them on 30 Oct 2026; 3 and 5 year returns are a year, compounded.

Category median, 1 year
+3.93%Middle of 20 funds
Category median, 3 years
+6.87%Middle of 19 funds
Category median, 5 years
+6.12%Middle of 18 funds

Banking and PSU funds

Size is the average money the fund managed over its latest quarter. Cost is its yearly expense ratio.Filter them in the screener

NAV of 30 Oct 2026

Tax on banking and PSU funds

Gains on units bought on or after 1 Apr 2023 are taxed at the income tax slab rate however long they are held; gains on units bought earlier are taxed at 12.5% when held over 24 months, or over 12 months for a listed fund such as an ETF, and at the slab rate otherwise.

Rules in force from 23 Jul 2024, checked 27 Oct 2026. Surcharge and cess are not included.

About banking and PSU funds in India

Banking and PSU funds in India are open-ended debt mutual funds that invest mainly in bonds and other debt issued by banks, public sector undertakings (PSUs, companies owned by the government) and public financial institutions. SEBI sets the category by that issuer mix, not by the length of the bonds.

What SEBI requires

SEBI requires a Banking and PSU Debt Fund, the category's official name, to invest at least 80% of total assets in debt of banks, PSUs, public financial institutions and municipal bonds. The 80% is measured after the 10% of net assets the fund must keep in liquid assets, so the floor is 72% of net assets. The rule is about who issues the debt. It sets no limit on duration, the weighted average time a portfolio takes to repay its cash flows.

The remainder can sit in other debt and money market instruments, such as treasury bills, government securities and corporate bonds from private issuers.

What these funds hold

Typical holdings are bonds of public sector banks, large government-owned companies in sectors such as power, energy and railways, and public financial institutions, and certificates of deposit issued by banks. Because the issuers are banks and government-owned bodies, the portfolio is concentrated in one kind of borrower, and a fund's returns move with interest rates and with the spread, the extra yield these bonds pay over government securities.

Difference from corporate bond and short duration funds

A corporate bond fund is defined by credit quality: at least 80% in corporate bonds rated AA+ and above, from any kind of issuer. A short term fund (formerly short duration) is defined by duration, 1 to 3 years for the whole portfolio, whoever the issuer is. A banking and PSU fund is defined by the issuer type alone, so its duration varies from one fund to another and over time.

Taxation

Gains on units of a fund that holds mostly debt, bought on or after 1 Apr 2023, are taxed at the holder's income tax slab rate whatever the holding period, with no indexation (adjusting the purchase cost for inflation). Units bought earlier follow the older holding-period rules.

What this page lists

The page lists every live fund in the category, ordered by 5-year return, highest first. Funds younger than five years follow, sorted by name. Each return is for the fund's Direct plan (the plan with no distributor commission) where one exists, measured to its latest NAV, with 3-year and 5-year returns compounded per year. A dash marks a period the fund is too young to have.

Size is the average money the fund managed over its latest quarter, and cost is the yearly expense ratio. The three medians above the table are the middle return among the funds that have that period.