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Top 5 Best Banking and PSU Debt Funds 2025

Updated on March 24, 2025 , 20620 views

Banking and PSU Debt Funds are the new sub-category introduced by the Securities and Exchange Board of India (SEBI) in the debt Mutual Fund category. These funds predominantly invests in debt and money market instruments consisting of securities issued by entities such as Banks, Public Financial Institutions, Public Sector Undertakings, etc. This option is considered to maintain an optimum balance of liquidity, safety, and yield.

The Banking and PSU Debt fund belongs to the short term category of debt funds that aims to offer secured returns and minimise risk by Investing in good-quality debt instruments predominately issued by banks and public sector undertakings. Investors who are keen to invest for a short duration, ideally for 2-3 years can invest in this scheme.

Here are some of the best performing Banking and PSU debt Funds 2025 - 2026.

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Top Performing Banking and PSU Debt Funds

Fund	NAV	Net Assets (Cr)	3 MO (%)	6 MO (%)	1 YR (%)	3 YR (%)	2023 (%)	Debt Yield (YTM)	Mod. Duration	Eff. Maturity
HDFC Banking and PSU Debt Fund Growth	₹22.4231 ↑ 0.03	₹5,837	2	3.4	7.9	6.4	7.9	4.03%	3Y 9M 14D	5Y 4M 30D
UTI Banking & PSU Debt Fund Growth	₹21.3586 ↑ 0.02	₹825	2	3.5	7.7	8.5	7.6	7.32%	2Y 2M 8D	2Y 6M 25D
DSP BlackRock Banking and PSU Debt Fund Growth	₹23.5058 ↑ 0.04	₹3,211	2	3.1	8.2	6.5	8.6	7.38%	5Y 3M	9Y 8M 8D
Aditya Birla Sun Life Banking & PSU Debt Fund Growth	₹357.449 ↑ 0.38	₹9,586	2	3.5	8	6.5	7.9	7.43%	3Y 4M 6D	4Y 8M 1D
Kotak Banking and PSU Debt fund Growth	₹63.7325 ↑ 0.06	₹5,762	2	3.4	8	6.5	8	7.39%	3Y 1M 10D	4Y 10M 2D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 26 Mar 25

Top 5 Best Performing Banking and PSU Debt Funds

1. HDFC Banking and PSU Debt Fund

To generate regular income through investments in debt and money market instruments consisting predominantly of securities issued by entities such as Scheduled Commercial Banks and Public Sector undertakings. There is no assurance that the investment objective of the Scheme will be realized.

HDFC Banking and PSU Debt Fund is a Debt - Banking & PSU Debt fund was launched on 26 Mar 14. It is a fund with Moderately Low risk and has given a CAGR/Annualized return of 7.6% since its launch. Ranked 6 in Banking & PSU Debt category. Return for 2024 was 7.9% , 2023 was 6.8% and 2022 was 3.3% .

Below is the key information for HDFC Banking and PSU Debt Fund

HDFC Banking and PSU Debt Fund Growth
Launch Date	26 Mar 14
NAV (26 Mar 25)	₹22.4231 ↑ 0.03 (0.13 %)
Net Assets (Cr)	₹5,837 on 28 Feb 25
Category	Debt - Banking & PSU Debt
AMC	HDFC Asset Management Company Limited
Rating	☆☆☆☆☆
Risk	Moderately Low
Expense Ratio	0.79
Sharpe Ratio	0.52
Information Ratio	0
Alpha Ratio	0
Min Investment	5,000
Min SIP Investment	300
Exit Load	NIL
Yield to Maturity	4.03%
Effective Maturity	5 Years 4 Months 30 Days
Modified Duration	3 Years 9 Months 14 Days

Growth of 10,000 investment over the years.

Date	Value
29 Feb 20	₹10,000
28 Feb 21	₹10,762
28 Feb 22	₹11,283
28 Feb 23	₹11,685
29 Feb 24	₹12,564
28 Feb 25	₹13,487

HDFC Banking and PSU Debt Fund SIP Returns

Total investment amount is ₹180,000
expected amount after 3 Years is ₹200,132.
Net Profit of ₹20,132 Invest Now

Returns for HDFC Banking and PSU Debt Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 26 Mar 25

Duration	Returns
1 Month	0.8%
3 Month	2%
6 Month	3.4%
1 Year	7.9%
3 Year	6.4%
5 Year	6.9%
10 Year
15 Year
Since launch	7.6%

Historical performance (Yearly) on absolute basis

Year	Returns
2023	7.9%
2022	6.8%
2021	3.3%
2020	3.7%
2019	10.6%
2018	10.2%
2017	5.9%
2016	6.3%
2015	10.8%
2014	9.8%

Fund Manager information for HDFC Banking and PSU Debt Fund

Name	Since	Tenure
Anil Bamboli	26 Mar 14	10.94 Yr.
Dhruv Muchhal	22 Jun 23	1.69 Yr.

Data below for HDFC Banking and PSU Debt Fund as on 28 Feb 25

Asset Allocation

Asset Class	Value
Cash	4.11%
Debt	95.61%
Other	0.29%

Debt Sector Allocation

Sector	Value
Corporate	52.29%
Government	43.32%
Cash Equivalent	4.11%

Credit Quality

Rating	Value
AA	1.52%
AAA	98.48%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
Indian Railway Finance Corporation Limited Debentures \| -	5%	₹277 Cr	27,500
7.18% Govt Stock 2033 Sovereign Bonds \| -	4%	₹226 Cr	22,000,000 ↓ -2,500,000
Small Industries Development Bank Of India Debentures \| -	4%	₹225 Cr	22,500
Indian Railway Finance Corporation Limited Debentures \| -	3%	₹202 Cr	20,000
7.26% Govt Stock 2033 Sovereign Bonds \| -	3%	₹196 Cr	19,000,000 ↓ -2,500,000
State Bank Of India Debentures \| -	3%	₹175 Cr	175
Bajaj Housing Finance Limited Debentures \| -	3%	₹151 Cr	15,000
Rural Electrification Corporation Limited Debentures \| -	3%	₹151 Cr	1,500
Housing and Urban Development Corporation, Ltd. Domestic Bonds \| -	3%	₹150 Cr	15,000 ↑ 15,000
Housing And Urban Development Corporation Limited Debentures \| -	2%	₹130 Cr	1,250

2. UTI Banking & PSU Debt Fund

The investment objective of the scheme is to generate steady and reasonable income, with low risk and high level of liquidity from a portfolio of predominantly debt & money market securities by Banks and Public Sector Undertakings (PSUs).

UTI Banking & PSU Debt Fund is a Debt - Banking & PSU Debt fund was launched on 3 Feb 14. It is a fund with Moderate risk and has given a CAGR/Annualized return of 7% since its launch. Ranked 3 in Banking & PSU Debt category. Return for 2024 was 7.6% , 2023 was 6.7% and 2022 was 10.3% .

Below is the key information for UTI Banking & PSU Debt Fund

UTI Banking & PSU Debt Fund Growth
Launch Date	3 Feb 14
NAV (26 Mar 25)	₹21.3586 ↑ 0.02 (0.08 %)
Net Assets (Cr)	₹825 on 28 Feb 25
Category	Debt - Banking & PSU Debt
AMC	UTI Asset Management Company Ltd
Rating	☆☆☆☆☆
Risk	Moderate
Expense Ratio	0.55
Sharpe Ratio	0.68
Information Ratio	0
Alpha Ratio	0
Min Investment	5,000
Min SIP Investment	500
Exit Load	NIL
Yield to Maturity	7.32%
Effective Maturity	2 Years 6 Months 25 Days
Modified Duration	2 Years 2 Months 8 Days

Growth of 10,000 investment over the years.

Date	Value
29 Feb 20	₹10,000
28 Feb 21	₹10,652
28 Feb 22	₹11,066
28 Feb 23	₹12,186
29 Feb 24	₹13,110
28 Feb 25	₹14,081

UTI Banking & PSU Debt Fund SIP Returns

Total investment amount is ₹180,000
expected amount after 3 Years is ₹203,125.
Net Profit of ₹23,125 Invest Now

Returns for UTI Banking & PSU Debt Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 26 Mar 25

Duration	Returns
1 Month	0.7%
3 Month	2%
6 Month	3.5%
1 Year	7.7%
3 Year	8.5%
5 Year	7.7%
10 Year
15 Year
Since launch	7%

Historical performance (Yearly) on absolute basis

Year	Returns
2023	7.6%
2022	6.7%
2021	10.3%
2020	2.8%
2019	8.9%
2018	-1%
2017	6.8%
2016	6.4%
2015	11.7%
2014	8.6%

Fund Manager information for UTI Banking & PSU Debt Fund

Name	Since	Tenure
Anurag Mittal	1 Dec 21	3.25 Yr.

Data below for UTI Banking & PSU Debt Fund as on 28 Feb 25

Asset Allocation

Asset Class	Value
Cash	5.4%
Debt	94.29%
Other	0.32%

Debt Sector Allocation

Sector	Value
Corporate	49.54%
Government	44.74%
Cash Equivalent	5.4%

Credit Quality

Rating	Value
AAA	100%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
7.38% Govt Stock 2027 Sovereign Bonds \| -	11%	₹86 Cr	850,000,000
Axis Bank Limited Debentures \| -	7%	₹55 Cr	550
Small Industries Development Bank Of India Debentures \| -	6%	₹50 Cr	5,000
Export-Import Bank Of India Debentures \| -	6%	₹50 Cr	5,000
ICICI Bank Limited Debentures \| -	6%	₹48 Cr	500
7.37% Govt Stock 2028 Sovereign Bonds \| -	6%	₹46 Cr	450,000,000
Power Finance Corporation Limited Debentures \| -	5%	₹40 Cr	400
Rural Electrification Corporation Limited Debentures \| -	4%	₹35 Cr	3,500
HDFC Bank Limited Debentures \| -	4%	₹35 Cr	350
Indian Railway Finance Corporation Limited Debentures \| -	4%	₹30 Cr	300

3. DSP BlackRock Banking and PSU Debt Fund

The investment objective of the Scheme is to seek to generate income and capital appreciation by primarily investing in a portfolio of high quality debt and money market securities that are issued by banks and public sector entities/undertakings.

DSP BlackRock Banking and PSU Debt Fund is a Debt - Banking & PSU Debt fund was launched on 14 Sep 13. It is a fund with Moderate risk and has given a CAGR/Annualized return of 7.7% since its launch. Ranked 20 in Banking & PSU Debt category. Return for 2024 was 8.6% , 2023 was 6.7% and 2022 was 3.2% .

Below is the key information for DSP BlackRock Banking and PSU Debt Fund

DSP BlackRock Banking and PSU Debt Fund Growth
Launch Date	14 Sep 13
NAV (26 Mar 25)	₹23.5058 ↑ 0.04 (0.16 %)
Net Assets (Cr)	₹3,211 on 28 Feb 25
Category	Debt - Banking & PSU Debt
AMC	DSP BlackRock Invmt Managers Pvt. Ltd.
Rating	☆☆☆☆
Risk	Moderate
Expense Ratio	0.58
Sharpe Ratio	0.29
Information Ratio	0
Alpha Ratio	0
Min Investment	1,000
Min SIP Investment	500
Exit Load	0-1 Months (0.25%),1 Months and above(NIL)
Yield to Maturity	7.38%
Effective Maturity	9 Years 8 Months 8 Days
Modified Duration	5 Years 3 Months

Growth of 10,000 investment over the years.

Date	Value
29 Feb 20	₹10,000
28 Feb 21	₹10,795
28 Feb 22	₹11,274
28 Feb 23	₹11,645
29 Feb 24	₹12,570
28 Feb 25	₹13,497

DSP BlackRock Banking and PSU Debt Fund SIP Returns

Total investment amount is ₹180,000
expected amount after 3 Years is ₹200,132.
Net Profit of ₹20,132 Invest Now

Returns for DSP BlackRock Banking and PSU Debt Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 26 Mar 25

Duration	Returns
1 Month	1.1%
3 Month	2%
6 Month	3.1%
1 Year	8.2%
3 Year	6.5%
5 Year	6.9%
10 Year
15 Year
Since launch	7.7%

Historical performance (Yearly) on absolute basis

Year	Returns
2023	8.6%
2022	6.7%
2021	3.2%
2020	3.1%
2019	10.9%
2018	9.9%
2017	6.3%
2016	5.4%
2015	10.6%
2014	8.6%

Fund Manager information for DSP BlackRock Banking and PSU Debt Fund

Name	Since	Tenure
Sandeep Yadav	1 Aug 24	0.58 Yr.
Shantanu Godambe	1 Jun 23	1.75 Yr.

Data below for DSP BlackRock Banking and PSU Debt Fund as on 28 Feb 25

Asset Allocation

Asset Class	Value
Cash	11.36%
Debt	88.4%
Other	0.24%

Debt Sector Allocation

Sector	Value
Corporate	51.12%
Government	46.01%
Cash Equivalent	2.62%

Credit Quality

Rating	Value
AAA	100%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
7.3% Govt Stock 2053 Sovereign Bonds \| -	13%	₹417 Cr	40,000,000 ↑ 7,500,000
Small Industries Development Bank Of India Debentures \| -	4%	₹129 Cr	12,500
Power Grid Corporation Of India Limited Debentures \| -	3%	₹110 Cr	1,050
National Bank for Agriculture and Rural Development Domestic Bonds \| -	3%	₹107 Cr	10,000
Indian Railway Finance Corporation Limited Debentures \| -	3%	₹107 Cr	1,000
State Bank Of India Debentures \| -	3%	₹105 Cr	100
GAil (India) Limited Debentures \| -	3%	₹101 Cr	1,000
State Government Securities (08/01/2038) Sovereign Bonds \| -	3%	₹86 Cr	8,500,000
Rural Electrification Corporation Limited Debentures \| -	2%	₹81 Cr	7,500
Rec Limited Debentures \| -	2%	₹80 Cr	7,500

4. Aditya Birla Sun Life Banking & PSU Debt Fund

(Erstwhile Aditya Birla Sun Life Treasury Optimizer Fund)

An Open-ended short term income scheme with the objective to generate income and capital appreciation by investing 100% of the corpus in a diversified portfolio of debt and money market securities with relatively low levels of interest rate risk.

Aditya Birla Sun Life Banking & PSU Debt Fund is a Debt - Banking & PSU Debt fund was launched on 9 May 08. It is a fund with Moderate risk and has given a CAGR/Annualized return of 7.8% since its launch. Ranked 9 in Banking & PSU Debt category. Return for 2024 was 7.9% , 2023 was 6.9% and 2022 was 3.7% .

Below is the key information for Aditya Birla Sun Life Banking & PSU Debt Fund

Aditya Birla Sun Life Banking & PSU Debt Fund Growth
Launch Date	9 May 08
NAV (26 Mar 25)	₹357.449 ↑ 0.38 (0.11 %)
Net Assets (Cr)	₹9,586 on 28 Feb 25
Category	Debt - Banking & PSU Debt
AMC	Birla Sun Life Asset Management Co Ltd
Rating	☆☆☆☆
Risk	Moderate
Expense Ratio	0.7
Sharpe Ratio	0.68
Information Ratio	0
Alpha Ratio	0
Min Investment	1,000
Min SIP Investment	1,000
Exit Load	NIL
Yield to Maturity	7.43%
Effective Maturity	4 Years 8 Months 1 Day
Modified Duration	3 Years 4 Months 6 Days

Growth of 10,000 investment over the years.

Date	Value
29 Feb 20	₹10,000
28 Feb 21	₹10,771
28 Feb 22	₹11,325
28 Feb 23	₹11,761
29 Feb 24	₹12,639
28 Feb 25	₹13,580

Aditya Birla Sun Life Banking & PSU Debt Fund SIP Returns

Total investment amount is ₹180,000
expected amount after 3 Years is ₹203,125.
Net Profit of ₹23,125 Invest Now

Returns for Aditya Birla Sun Life Banking & PSU Debt Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 26 Mar 25

Duration	Returns
1 Month	0.8%
3 Month	2%
6 Month	3.5%
1 Year	8%
3 Year	6.5%
5 Year	7%
10 Year
15 Year
Since launch	7.8%

Historical performance (Yearly) on absolute basis

Year	Returns
2023	7.9%
2022	6.9%
2021	3.7%
2020	3.6%
2019	10.9%
2018	9.9%
2017	6.6%
2016	5.6%
2015	12.3%
2014	8.5%

Fund Manager information for Aditya Birla Sun Life Banking & PSU Debt Fund

Name	Since	Tenure
Kaustubh Gupta	29 Sep 09	15.43 Yr.
Harshil Suvarnkar	22 Mar 21	3.94 Yr.

Data below for Aditya Birla Sun Life Banking & PSU Debt Fund as on 28 Feb 25

Asset Allocation

Asset Class	Value
Cash	12.49%
Debt	87.24%
Other	0.27%

Debt Sector Allocation

Sector	Value
Corporate	64.39%
Government	31.77%
Cash Equivalent	3.57%

Credit Quality

Rating	Value
AAA	100%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
Power Finance Corporation Ltd. Debentures \| -	3%	₹301 Cr	30,000
Power Finance Corp Ltd. 7.6% Debentures \| -	3%	₹251 Cr	25,000
7.1% Govt Stock 2034 Sovereign Bonds \| -	3%	₹249 Cr	24,404,000 ↑ 2,500,000
Small Industries Development Bank Of India Debentures \| -	3%	₹245 Cr	24,500
7.18% Govt Stock 2037 Sovereign Bonds \| -	2%	₹224 Cr	21,946,000
State Bank Of India Debentures \| -	2%	₹209 Cr	210
REC Ltd. 7.71% Debentures \| -	2%	₹196 Cr	19,500
7.18% Govt Stock 2033 Sovereign Bonds \| -	2%	₹185 Cr	18,074,100 ↓ -1,000,000
National Bank For Agriculture And Rural Development Debentures \| -	2%	₹185 Cr	18,500
Rural Electrification Corporation Limited Debentures \| -	2%	₹175 Cr	17,500

5. Kotak Banking and PSU Debt fund

To generate income by predominantly investing in debt & money market securities issued by Banks & PSUs and Reverse Repos in such securities, sovereign securities issued by the Central Government and State Governments, and / or any security unconditionally guaranteed by the Govt. of India.

Kotak Banking and PSU Debt fund is a Debt - Banking & PSU Debt fund was launched on 29 Dec 98. It is a fund with Moderately Low risk and has given a CAGR/Annualized return of since its launch. Ranked 19 in Banking & PSU Debt category. Return for 2024 was 8% , 2023 was 6.8% and 2022 was 3.6% .

Below is the key information for Kotak Banking and PSU Debt fund

Kotak Banking and PSU Debt fund Growth
Launch Date	29 Dec 98
NAV (26 Mar 25)	₹63.7325 ↑ 0.06 (0.10 %)
Net Assets (Cr)	₹5,762 on 28 Feb 25
Category	Debt - Banking & PSU Debt
AMC	Kotak Mahindra Asset Management Co Ltd
Rating	☆☆☆☆
Risk	Moderately Low
Expense Ratio	0.81
Sharpe Ratio	0.62
Information Ratio	0
Alpha Ratio	0
Min Investment	5,000
Min SIP Investment	1,000
Exit Load	NIL
Yield to Maturity	7.39%
Effective Maturity	4 Years 10 Months 2 Days
Modified Duration	3 Years 1 Month 10 Days

Growth of 10,000 investment over the years.

Date	Value
29 Feb 20	₹10,000
28 Feb 21	₹10,742
28 Feb 22	₹11,296
28 Feb 23	₹11,719
29 Feb 24	₹12,613
28 Feb 25	₹13,555

Kotak Banking and PSU Debt fund SIP Returns

Total investment amount is ₹180,000
expected amount after 3 Years is ₹200,132.
Net Profit of ₹20,132 Invest Now

Returns for Kotak Banking and PSU Debt fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 26 Mar 25

Duration	Returns
1 Month	0.8%
3 Month	2%
6 Month	3.4%
1 Year	8%
3 Year	6.5%
5 Year	7%
10 Year
15 Year
Since launch

Historical performance (Yearly) on absolute basis

Year	Returns
2023	8%
2022	6.8%
2021	3.6%
2020	3.9%
2019	10.5%
2018	10.8%
2017	6.7%
2016	6.2%
2015	10%
2014	8.6%

Fund Manager information for Kotak Banking and PSU Debt fund

Name	Since	Tenure
Deepak Agrawal	1 Aug 08	16.59 Yr.
Abhishek Bisen	1 Nov 22	2.33 Yr.

Data below for Kotak Banking and PSU Debt fund as on 28 Feb 25

Asset Allocation

Asset Class	Value
Cash	5.61%
Debt	94.1%
Other	0.29%

Debt Sector Allocation

Sector	Value
Corporate	53.95%
Government	40.15%
Cash Equivalent	5.61%

Credit Quality

Rating	Value
AA	2.67%
AAA	97.33%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
7.18% Govt Stock 2033 Sovereign Bonds \| -	9%	₹494 Cr	48,143,730 ↓ -2,000,000
7.1% Govt Stock 2034 Sovereign Bonds \| -	7%	₹407 Cr	39,786,520 ↓ -5,000,000
Power Finance Corp Ltd. 0.076% Debentures \| -	6%	₹333 Cr	33,000
7.93% Govt Stock 2033 Sovereign Bonds \| -	4%	₹220 Cr	21,432,280 ↓ -500,000
National Bank For Agriculture And Rural Development Debentures \| -	4%	₹213 Cr	21,200
HDFC Bank Limited Debentures \| -	4%	₹212 Cr	21,000
Power Grid Corporation Of India Limited Debentures \| -	3%	₹183 Cr	20,002
Rural Electrification Corporation Limited Debentures \| -	3%	₹157 Cr	15,500
Rural Electrification Corporation Limited Debentures \| -	3%	₹153 Cr	15,000
State Bank Of India Debentures \| -	2%	₹141 Cr	1,450

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Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.