Best Banking & PSU Mutual Funds
Banking and PSU funds must keep at least 80% in the debt of banks, public sector undertakings, public financial institutions and municipal bonds. That issuer restriction is the category: it targets high-rated, quasi-sovereign borrowers, so credit risk is low and the main risk left is interest rates.
Top banking & PSU mutual funds by 3Y returns
19Direct plan, Growth option — ranked by 3-year CAGR. Open a fund for NAV history, rolling returns, risk metrics and peer rank.
As of 06 Oct 2026, UTI Banking & PSU Debt Fund (Direct plan, Growth option) leads banking & PSU mutual funds on 3-year CAGR at +7.54%, followed by Franklin India Banking & PSU Debt Fund at +7.50% and Kotak Banking and PSU Debt Fund at +7.35%. Across 20 banking & PSU mutual funds the category averaged +7.12% over three years, at an average expense ratio of 0.34%. All figures are computed from public AMFI NAV history and recomputed daily; past returns do not predict future ones.
| 1 | UTI Banking & PSU Debt Fund UTI | ★★★★★ | +5.9% | +7.5% | +7.8% | 0.24% | ₹1,449Cr |
| 2 | Franklin India Banking & PSU Debt Fund Franklin Templeton | ★★★★★ | +6.0% | +7.5% | +6.5% | 0.23% | ₹576.51Cr |
| 3 | Kotak Banking and PSU Debt Fund Kotak Mahindra | ★★★★☆ | +5.0% | +7.4% | +6.4% | 0.40% | ₹4,928Cr |
| 4 | LIC MF Banking & PSU Debt Fund LIC | ★★★★☆ | +4.9% | +7.3% | +6.3% | 0.28% | ₹1,755Cr |
| 5 | ICICI Prudential Banking and PSU Debt Fund ICICI Prudential | ★★★★☆ | +5.1% | +7.2% | +6.6% | 0.40% | ₹8,743Cr |
| 6 | SBI Banking & PSU Debt Fund SBI | ★★★☆☆ | +4.8% | +7.2% | +6.2% | 0.41% | ₹2,687Cr |
| 7 | Invesco India Banking and PSU Debt FundSmall fund Invesco | ★★☆☆☆ | +4.6% | +7.2% | +5.7% | 0.26% | ₹85.53Cr |
| 8 | Bandhan Banking and PSU Debt Fund Bandhan | ★★★★☆ | +5.5% | +7.2% | +6.3% | 0.39% | ₹12,058Cr |
| 9 | Nippon India Banking and PSU Debt Fund Nippon India | ★★☆☆☆ | +4.5% | +7.1% | +6.2% | 0.39% | ₹5,175Cr |
| 10 | Edelweiss Banking and PSU Debt Fund Edelweiss | ★★★☆☆ | +4.6% | +7.1% | +6.0% | 0.40% | ₹3,117Cr |
| 11 | Sundaram Banking and PSU Debt Fund Sundaram | ★★★☆☆ | +4.6% | +7.1% | +6.0% | 0.27% | ₹262.98Cr |
| 12 | HDFC Banking and PSU Debt Fund HDFC | ★★★☆☆ | +4.5% | +7.1% | +6.2% | 0.35% | ₹5,200Cr |
| 13 | Aditya Birla Sun Life Banking & PSU Debt Fund Aditya Birla Sun Life | ★★★☆☆ | +4.4% | +7.0% | +6.2% | 0.41% | ₹8,741Cr |
| 14 | ITI Banking & PSU Debt FundSmall fund ITI | ★★★☆☆ | +4.7% | +7.0% | +6.3% | 0.23% | ₹33.68Cr |
| 15 | Axis Banking and PSU Debt Fund Axis | ★★★★☆ | +4.7% | +7.0% | +6.2% | 0.36% | ₹12,130Cr |
| 16 | HSBC Banking and PSU Debt Fund HSBC | ★★☆☆☆ | +4.6% | +7.0% | — | 0.28% | ₹3,782Cr |
| 17 | DSP Banking and PSU Debt Fund DSP | ★★☆☆☆ | +3.8% | +6.9% | +6.0% | 0.34% | ₹3,150Cr |
| 18 | Mirae Asset Banking and PSU Debt FundSmall fund Mirae Asset | ★☆☆☆☆ | +4.3% | +6.9% | +5.9% | 0.37% | ₹39.75Cr |
| 19 | Canara Robeco Banking and PSU Debt Fund Canara Robeco | ★☆☆☆☆ | +4.3% | +6.6% | — | 0.42% | ₹172.14Cr |
NAV data as of 06 Oct 2026. Returns are CAGR for periods ≥1 year, computed from AMFI NAV history. Ratings are WealthTicker’s own, ranked within sub-category peers — not a SEBI or agency rating. See our methodology for every formula. This is data, not investment advice.
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Frequently asked questions
What are banking & PSU mutual funds?
Banking and PSU funds must keep at least 80% in the debt of banks, public sector undertakings, public financial institutions and municipal bonds. That issuer restriction is the category: it targets high-rated, quasi-sovereign borrowers, so credit risk is low and the main risk left is interest rates.
Which is the best banking & PSU fund right now?
UTI Banking & PSU Debt Fund by UTI currently ranks first among banking & PSU mutual funds by 3-year CAGR at +7.54%. Rankings move with NAVs — past returns don't guarantee future performance.
What returns have banking & PSU mutual funds given?
The category has averaged +4.77% over 1 year, +7.12% annualized over 3 years, +6.29% annualized over 5 years — peer averages over the live funds in the category, computed from AMFI NAV history.
How are banking & PSU mutual funds taxed?
Debt taxation: all gains are added to your income and taxed at your slab rate, regardless of holding period (for units bought on or after 1 April 2023).