The number
The median banking and PSU debt fund returned 4.51% in the year to 9 October 2026. Over three years it is 7.13% a year and over five years 6.22%. The last year was weaker than the longer record, and the gap between best and worst fund was narrow, only 2.35 points.
All figures are for the Direct plan, Growth option, computed from daily NAVs to 9 October 2026. Returns of a year or more are compounded annual rates. The category invests at least 80% in debt of banks, public sector undertakings and public financial institutions.
Every fund with a year of history
| Fund | 1 year | 3 years a year | 5 years a year | Worst fall in 3 years | Direct expense ratio |
|---|---|---|---|---|---|
| UTI Banking & PSU Debt Fund | 5.98% | 7.58% | 7.78% | −0.4% | 0.24% |
| Franklin India Banking & PSU Debt Fund | 5.93% | 7.50% | 6.48% | −0.6% | 0.23% |
| Bandhan Banking and PSU Debt Fund | 5.43% | 7.18% | 6.28% | −0.6% | 0.39% |
| ICICI Prudential Banking and PSU Debt Fund | 4.89% | 7.20% | 6.61% | −0.7% | 0.40% |
| LIC MF Banking & PSU Debt Fund | 4.86% | 7.35% | 6.29% | −0.6% | 0.28% |
| Kotak Banking and PSU Debt Fund | 4.82% | 7.33% | 6.41% | −0.6% | 0.40% |
| SBI Banking & PSU Debt Fund | 4.75% | 7.21% | 6.16% | −0.6% | 0.41% |
| ITI Banking & PSU Debt Fund | 4.59% | 7.01% | 6.34% | −0.4% | 0.23% |
| Axis Banking and PSU Debt Fund | 4.59% | 6.97% | 6.15% | −0.5% | 0.36% |
| Edelweiss Banking and PSU Debt Fund | 4.53% | 7.22% | 6.09% | −0.7% | 0.40% |
| Sundaram Banking and PSU Debt Fund | 4.49% | 7.06% | 6.02% | −0.5% | 0.27% |
| HSBC Banking and PSU Debt Fund | 4.48% | 6.94% | — | −0.6% | 0.28% |
| Invesco India Banking and PSU Debt Fund | 4.47% | 7.18% | 5.69% | −0.9% | 0.26% |
| Bajaj Finserv Banking and PSU Debt Fund | 4.45% | — | — | — | 0.35% |
| Nippon India Banking and PSU Debt Fund | 4.40% | 7.13% | 6.22% | −0.7% | 0.39% |
| HDFC Banking and PSU Debt Fund | 4.31% | 7.05% | 6.22% | −0.7% | 0.35% |
| Aditya Birla Sun Life Banking & PSU Debt Fund | 4.18% | 7.01% | 6.21% | −0.6% | 0.41% |
| Mirae Asset Banking and PSU Debt Fund | 4.12% | 6.90% | 5.92% | −0.7% | 0.37% |
| Canara Robeco Banking and PSU Debt Fund | 3.97% | 6.58% | — | −0.6% | 0.42% |
| DSP Banking and PSU Debt Fund | 3.63% | 6.90% | 5.97% | −1.1% | 0.34% |
A dash means the fund is too young for that period. The expense ratios are the Direct-plan TER on AMFI's latest filings.
Who led, who lagged
UTI is the only fund in the top two on every period: first over one, three and five years, with a five-year return of 7.78% a year, more than a point ahead of the next fund, ICICI Prudential's 6.61%. Franklin India is a close second over one year (5.93%) and three (7.50%). Both are about 1.4 points ahead of the median fund over a year.
At the other end, DSP's 3.63% over a year is last, and its worst three-year fall, 1.1%, is also the deepest in the category, though that is still small in absolute terms. Canara Robeco has the lowest three-year return, 6.58%.
Cost and return
The cheapest funds were not all at the top. The five lowest Direct expense ratios belong to Franklin and ITI (0.23%), UTI (0.24%), Invesco (0.26%) and Sundaram (0.27%). Their one-year returns range from 4.47% to 5.98%, which means two of them (UTI and Franklin) lead the category and the other three sit around its middle. The median expense ratio is about 0.36%.
In a category where funds hold similar bonds, cost is one of the few things that differs between them, but it does not explain the whole table: UTI and Franklin lead with very low costs, while Bandhan, at 0.39%, is third.
How steady the category is
The NAV falls were tiny. Over three years the largest peak-to-trough fall among these funds was 1.1%, and the median 0.6%. For comparison, the median focused equity fund fell 17.8% in the same window (see focused fund returns). That is the point of the category for many investors: a high-quality, short-to-medium maturity portfolio with small fluctuations.
The trade-off is a modest return. A 4.51% median is well below the 6.52% median that money market funds returned in the year to 1 October 2026, so in this window the longer-maturity category earned less than the shortest-maturity one. The money market median was ahead over three years as well, at 7.37% a year against 7.13% here, though that figure is to 1 October.
Reading the table
The funds are close enough that the one-year ranking will move with small changes in yields, so the three- and five-year columns are the better guide to consistency. For the earlier reading see banking and PSU debt fund returns in June 2026, and for four of the older funds in detail, Kotak, Franklin, UTI and LIC compared. The screener can sort the whole category by any of these columns.
Frequently asked questions
What have banking and PSU debt funds returned in the last year?
The median fund (Direct plan, Growth option) returned 4.51% in the year to 9 October 2026, across 20 funds. UTI Banking & PSU Debt Fund led at 5.98% and DSP Banking and PSU Debt Fund trailed at 3.63%, a range of 2.35 points.
What is the three-year return of banking and PSU debt funds?
The median was 7.13% a year across 19 funds, from 6.58% (Canara Robeco) to 7.58% (UTI). Over five years the median of 17 funds was 6.22% a year, from 5.69% to 7.78%, both ends held by UTI and Invesco.
How risky have these funds been?
Their worst peak-to-trough fall in NAV over the last three years was small: a median of 0.6%, from 0.4% (UTI and ITI) to 1.1% (DSP). These funds hold bank, PSU and public financial institution debt, and there is no guarantee of that record continuing.
This is commentary on published data, not investment advice. WealthTicker is not a SEBI-registered adviser or distributor. Figures are WealthTicker’s own calculations from public data — AMFI’s fund NAVs and disclosures, NSE’s index and FII/DII files, and the fund houses’ monthly portfolios (how we calculate). They are as of the dates stated and can be revised by their source.
Keep reading
Banking & PSU debt funds: Kotak vs Franklin vs UTI vs LIC
To 9 October 2026, UTI's banking and PSU fund made 5.98% in a year on a 0.45-year book; Kotak's made 4.82% on a 3.73-year book, but yields more now.
Floater funds: ahead over three years, behind over one
To 6 October 2026 the 12 floating rate funds returned a median 5.98% in a year, below liquid funds' 6.47%, but 7.60% a year over three years against 6.93%.
Debt fund returns, overnight to gilt: October 2026
Over the year to 1 October 2026, ultra-short funds returned a median 6.53%; gilt funds 2.45% and long-term funds 1.26%. Fourteen debt categories compared.