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Overview
Banking and PSU Debt Funds are debt mutual funds that primarily invest in debt securities issued by banks, public sector undertakings, public financial institutions, and municipal bodies.
The category focuses on issuer type rather than one fixed duration range.
This means two Banking and PSU Debt Funds can hold portfolios with different interest-rate sensitivity even though both invest predominantly within the same broad issuer universe.
Explained
A Banking and PSU Debt Fund is an open-ended debt scheme that predominantly invests in debt instruments issued by:
The category name describes who issues the securities, not how long the bonds must take to mature.
This distinction is important because duration can vary substantially between funds.
Explained
The fund manager builds a portfolio primarily from eligible banking, PSU, PFI, and municipal debt.
The manager decides:
Even when the issuer is a public-sector entity, investors should distinguish between a bond issued by a PSU and a bond carrying an explicit sovereign guarantee.
They are not automatically the same thing.
Suitability
Banking and PSU Debt Funds may suit investors who:
Advantages
The category predominantly invests in debt issued by banks and specified public-sector-related institutions.
Many funds in this category may maintain relatively high credit quality, depending on their holdings. Investors should verify actual ratings rather than relying only on the category name.
The manager can adjust maturities based on interest-rate and yield-curve conditions.
A fund can hold debt from several banks and public-sector entities rather than concentrating money in one bond.
The category can form part of an investor's debt allocation when its duration and risk characteristics match the investor's goal.
Before you invest
A PSU bond is issued by a public-sector company, but not every PSU obligation carries an explicit Government of India guarantee. Check the actual security.
The category focuses primarily on issuer type rather than setting one narrow Macaulay duration band. One Banking and PSU Fund may therefore carry more interest-rate risk than another.
Banks and public-sector issuers can have different credit ratings and financial profiles. Review the scheme's portfolio and credit-rating distribution.
The portfolio naturally concentrates on a defined group of issuers. Check exposure to individual institutions and issuer groups.
Longer-maturity bonds can experience significant price movements when yields change.
Higher YTM can reflect longer duration, different issuer spreads, or additional risk. Compare YTM together with portfolio quality and duration.
Taxation
Banking and PSU Debt Funds predominantly invest in debt instruments.
Where the scheme meets the applicable Section 50AA definition of a Specified Mutual Fund, relevant units acquired on or after April 1, 2023 can receive deemed short-term capital-gains treatment irrespective of holding period.
Gains are generally taxed at the investor's applicable rate under prevailing tax provisions.
Investors should verify the latest tax position before redeeming units.
Step by step
Good to know
It is a debt mutual fund that predominantly invests in debt instruments issued by banks, PSUs, public financial institutions, and municipal bodies.
No. Not every bond issued by a PSU or other eligible institution carries a sovereign guarantee.
No. They remain exposed to interest-rate, credit, liquidity, and market risks.
No. The category is defined mainly by issuer exposure rather than one fixed Macaulay duration range.
Gilt Funds predominantly invest in government securities. Banking and PSU Debt Funds primarily invest in debt issued by banks and specified public-sector-related institutions.
Schemes meeting the Section 50AA debt exposure test can receive deemed short-term capital-gains treatment for relevant units, irrespective of holding period.
Recap
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FUND
Franklin India Banking & PSU Debt Fund Direct GrowthDebt Banking & PSU₹25.29
0.07%
6.61%
7.56%
6.44%
PGIM India Banking and PSU Debt fund Direct Plan Income IrregularDebt Banking & PSU₹15.24
0.05%4.53%
7.55%
8.2%
UTI Banking & PSU Debt Fund Direct Plan Half Yearly Reinvestment Inc Dist cum Cap Wdrl OptionDebt Banking & PSU₹15.94
0.01%6.21%
7.46%
7.71%
Kotak Banking and PSU Debt Direct GrowthDebt Banking & PSU₹72.7
0.12%5.74%
7.41%
6.48%
I
ICICI Prudential Banking and PSU Debt Fund Direct Plan GrowthDebt Banking & PSU₹36.46
0.16%5.86%
7.34%
6.68%
LIC MF Banking & PSU Debt Fund Direct Plan Growth OptionDebt Banking & PSU₹40.04
0.09%5.39%
7.27%
6.25%
Bandhan Banking & PSU Debt Fund Direct GrowthDebt Banking & PSU₹27.12
0.07%5.92%
7.2%
6.24%
Nippon India Banking & PSU Debt Fund Direct GrowthDebt Banking & PSU₹22.89
0.12%5.28%
7.18%
6.25%
Invesco India Banking & PSU Debt Fund Direct GrowthDebt Banking & PSU₹2578.87
0.15%5.12%
7.17%
5.66%
HDFC Banking & PSU Debt Fund Direct Plan Growth OptionDebt Banking & PSU₹25.46
0.18%5.29%
7.17%
6.28%
Franklin India Banking & PSU Debt Fund Direct Reinvestment Inc Dist cum Cap WdrlDebt Banking & PSU₹11.62
0.07%6.37%
7.4%
6.29%
SBI Banking and PSU Debt Fund Direct Plan GrowthDebt Banking & PSU₹3528.99
0.07%5.28%
7.16%
6.08%
UTI Banking & PSU Debt Fund Direct Plan GrowthDebt Banking & PSU₹24.02
0.01%6.21%
7.46%
7.72%
Edelweiss Banking and PSU Debt Fund Direct Plan GrowthDebt Banking & PSU₹27.09
0.06%4.91%
7.08%
6.01%
ITI Banking & PSU Fund Direct GrDebt Banking & PSU₹14.22
0.04%5.12%
7.07%
6.35%
LIC MF Banking & PSU Debt Fund Direct Plan Monthly Reinvestment of Income Dis cum Cap WdrlDebt Banking & PSU₹15.08
0.09%5.39%
7.27%
6.25%
Bandhan Banking & PSU Debt Fund Direct Payout of Inc Dis cum Cptl Wdrl OptDebt Banking & PSU₹14.27
0.07%5.92%
7.2%
6.24%
Nippon India Banking & PSU Debt Fund Direct Weekly Payout of Income Dis cum cptl wdrlDebt Banking & PSU₹10.25
0.12%5.13%
7.1%
6.21%
Invesco India Banking & PSU Debt Fund Direct Monthly Reinvestment of Income Dist cum Capital WtdrlDebt Banking & PSU₹1010.56
0.15%5.06%
7.1%
5.61%
Sundaram Banking and PSU Fund - Direct Plan - Growth OptionDebt Banking & PSU₹46.45
0.13%5.08%
7.05%
5.98%
Showing 1–20 of 99
