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Top 5 Best Banking and PSU Debt Funds 2025

Updated on July 20, 2025 , 20786 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 (%)	2024 (%)	Debt Yield (YTM)	Mod. Duration	Eff. Maturity
HDFC Banking and PSU Debt Fund Growth	₹23.2149 ↑ 0.00	₹6,094	1.7	5	9	7.6	7.9	6.82%	3Y 8M 23D	5Y 4M 10D
UTI Banking & PSU Debt Fund Growth	₹22.1207 ↑ 0.01	₹805	2.1	5	8.9	7.4	7.6	6.53%	1Y 10M 10D	2Y 1M 13D
Kotak Banking and PSU Debt fund Growth	₹65.9853 ↑ 0.03	₹6,183	1.7	5	9.1	7.7	8	6.82%	3Y 11D	4Y 6M 29D
Aditya Birla Sun Life Banking & PSU Debt Fund Growth	₹369.952 ↑ 0.08	₹9,122	1.7	5	9	7.6	7.9	6.81%	3Y 10M 17D	5Y 1M 24D
DSP BlackRock Banking and PSU Debt Fund Growth	₹24.2854 ↑ 0.01	₹4,219	1.3	4.8	9	7.6	8.6	6.66%	4Y 2M 8D	7Y 3M 18D
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 22 Jul 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 7.7% 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 (22 Jul 25)	₹23.2149 ↑ 0.00 (0.01 %)
Net Assets (Cr)	₹6,094 on 30 Jun 25
Category	Debt - Banking & PSU Debt
AMC	HDFC Asset Management Company Limited
Rating	☆☆☆☆☆
Risk	Moderately Low
Expense Ratio	0.79
Sharpe Ratio	1.45
Information Ratio	0
Alpha Ratio	0
Min Investment	5,000
Min SIP Investment	300
Exit Load	NIL
Yield to Maturity	6.82%
Effective Maturity	5 Years 4 Months 10 Days
Modified Duration	3 Years 8 Months 23 Days

Growth of 10,000 investment over the years.

Date	Value
30 Jun 20	₹10,000
30 Jun 21	₹10,603
30 Jun 22	₹10,878
30 Jun 23	₹11,592
30 Jun 24	₹12,398
30 Jun 25	₹13,520

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 22 Jul 25

Duration	Returns
1 Month	0.7%
3 Month	1.7%
6 Month	5%
1 Year	9%
3 Year	7.6%
5 Year	6.1%
10 Year
15 Year
Since launch	7.7%

Historical performance (Yearly) on absolute basis

Year	Returns
2024	7.9%
2023	6.8%
2022	3.3%
2021	3.7%
2020	10.6%
2019	10.2%
2018	5.9%
2017	6.3%
2016	10.8%
2015	9.8%

Fund Manager information for HDFC Banking and PSU Debt Fund

Name	Since	Tenure
Anil Bamboli	26 Mar 14	11.19 Yr.
Dhruv Muchhal	22 Jun 23	1.95 Yr.

Data below for HDFC Banking and PSU Debt Fund as on 30 Jun 25

Asset Allocation

Asset Class	Value
Cash	3.5%
Debt	96.22%
Other	0.28%

Debt Sector Allocation

Sector	Value
Corporate	52.56%
Government	43.67%
Cash Equivalent	3.5%

Credit Quality

Rating	Value
AAA	100%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
Indian Railway Finance Corporation Limited Debentures \| -	5%	₹282 Cr	27,500
Small Industries Development Bank Of India Debentures \| -	4%	₹227 Cr	22,500
Indian Railway Finance Corporation Limited Debentures \| -	3%	₹206 Cr	20,000
7.18% Govt Stock 2033 Sovereign Bonds \| -	3%	₹199 Cr	19,000,000
7.26% Govt Stock 2033 Sovereign Bonds \| -	3%	₹179 Cr	17,000,000
State Bank Of India Debentures \| -	3%	₹176 Cr	175
Rec Limited Debentures \| -	3%	₹153 Cr	1,500
Bajaj Housing Finance Limited Debentures \| -	3%	₹153 Cr	15,000
Housing And Urban Development Corporation Limited Debentures \| -	2%	₹153 Cr	15,000
Housing And Urban Development Corporation Limited Debentures \| -	2%	₹132 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 7.2% 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 (22 Jul 25)	₹22.1207 ↑ 0.01 (0.06 %)
Net Assets (Cr)	₹805 on 30 Jun 25
Category	Debt - Banking & PSU Debt
AMC	UTI Asset Management Company Ltd
Rating	☆☆☆☆☆
Risk	Moderate
Expense Ratio	0.55
Sharpe Ratio	2.05
Information Ratio	0
Alpha Ratio	0
Min Investment	5,000
Min SIP Investment	500
Exit Load	NIL
Yield to Maturity	6.53%
Effective Maturity	2 Years 1 Month 13 Days
Modified Duration	1 Year 10 Months 10 Days

Growth of 10,000 investment over the years.

Date	Value
30 Jun 20	₹10,000
30 Jun 21	₹10,396
30 Jun 22	₹11,289
30 Jun 23	₹12,086
30 Jun 24	₹12,889
30 Jun 25	₹14,046

UTI Banking & 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 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 22 Jul 25

Duration	Returns
1 Month	0.7%
3 Month	2.1%
6 Month	5%
1 Year	8.9%
3 Year	7.4%
5 Year	7%
10 Year
15 Year
Since launch	7.2%

Historical performance (Yearly) on absolute basis

Year	Returns
2024	7.6%
2023	6.7%
2022	10.3%
2021	2.8%
2020	8.9%
2019	-1%
2018	6.8%
2017	6.4%
2016	11.7%
2015	8.6%

Fund Manager information for UTI Banking & PSU Debt Fund

Name	Since	Tenure
Anurag Mittal	1 Dec 21	3.5 Yr.

Data below for UTI Banking & PSU Debt Fund as on 30 Jun 25

Asset Allocation

Asset Class	Value
Cash	3.94%
Debt	95.73%
Other	0.33%

Debt Sector Allocation

Sector	Value
Corporate	52.65%
Government	43.08%
Cash Equivalent	3.94%

Credit Quality

Rating	Value
AAA	100%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
7.38% Govt Stock 2027 Sovereign Bonds \| -	12%	₹93 Cr	900,000,000
Axis Bank Limited Debentures \| -	7%	₹56 Cr	550
Export Import Bank Of India Debentures \| -	6%	₹51 Cr	5,000
Small Industries Development Bank Of India Debentures \| -	6%	₹51 Cr	5,000
Power Finance Corporation Limited Debentures \| -	5%	₹41 Cr	400
Rural Electrification Corporation Limited Debentures \| -	4%	₹36 Cr	3,500
HDFC Bank Limited Debentures \| -	4%	₹35 Cr	350
Indian Railway Finance Corporation Limited Debentures \| -	4%	₹31 Cr	300
National Bank For Agriculture And Rural Development Debentures \| -	4%	₹31 Cr	3,000
National Bank For Agriculture And Rural Development Debentures \| -	3%	₹26 Cr	250

3. 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 (22 Jul 25)	₹65.9853 ↑ 0.03 (0.05 %)
Net Assets (Cr)	₹6,183 on 30 Jun 25
Category	Debt - Banking & PSU Debt
AMC	Kotak Mahindra Asset Management Co Ltd
Rating	☆☆☆☆
Risk	Moderately Low
Expense Ratio	0.81
Sharpe Ratio	1.55
Information Ratio	0
Alpha Ratio	0
Min Investment	5,000
Min SIP Investment	1,000
Exit Load	NIL
Yield to Maturity	6.82%
Effective Maturity	4 Years 6 Months 29 Days
Modified Duration	3 Years 11 Days

Growth of 10,000 investment over the years.

Date	Value
30 Jun 20	₹10,000
30 Jun 21	₹10,547
30 Jun 22	₹10,839
30 Jun 23	₹11,595
30 Jun 24	₹12,416
30 Jun 25	₹13,551

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 22 Jul 25

Duration	Returns
1 Month	0.6%
3 Month	1.7%
6 Month	5%
1 Year	9.1%
3 Year	7.7%
5 Year	6.1%
10 Year
15 Year
Since launch

Historical performance (Yearly) on absolute basis

Year	Returns
2024	8%
2023	6.8%
2022	3.6%
2021	3.9%
2020	10.5%
2019	10.8%
2018	6.7%
2017	6.2%
2016	10%
2015	8.6%

Fund Manager information for Kotak Banking and PSU Debt fund

Name	Since	Tenure
Deepak Agrawal	1 Aug 08	16.84 Yr.
Dharmesh Thakar	1 Jun 25	0 Yr.

Data below for Kotak Banking and PSU Debt fund as on 30 Jun 25

Asset Allocation

Asset Class	Value
Cash	2.63%
Debt	97.1%
Other	0.27%

Debt Sector Allocation

Sector	Value
Corporate	56.85%
Government	40.25%
Cash Equivalent	2.63%

Credit Quality

Rating	Value
AA	2.49%
AAA	97.51%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
7.18% Govt Stock 2033 Sovereign Bonds \| -	8%	₹518 Cr	49,343,730
Power Finance Corporation Limited Debentures \| -	5%	₹339 Cr	33,000
7.1% Govt Stock 2034 Sovereign Bonds \| -	5%	₹281 Cr	26,836,520
National Housing Bank Debentures \| -	4%	₹225 Cr	22,500 ↑ 2,500
Indian Oil Corporation Limited Debentures \| -	3%	₹195 Cr	19,000
Power Grid Corporation Of India Limited Debentures \| -	3%	₹185 Cr	20,002
HDFC Bank Limited Debentures \| -	3%	₹157 Cr	1,500
Rec Limited Debentures \| -	3%	₹156 Cr	15,000
7.59% Govt Stock 2031 Sovereign Bonds \| -	2%	₹153 Cr	15,000,000 ↑ 5,000,000
State Bank Of India Debentures \| -	2%	₹143 Cr	1,450

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 7.9% 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 (22 Jul 25)	₹369.952 ↑ 0.08 (0.02 %)
Net Assets (Cr)	₹9,122 on 15 Jul 25
Category	Debt - Banking & PSU Debt
AMC	Birla Sun Life Asset Management Co Ltd
Rating	☆☆☆☆
Risk	Moderate
Expense Ratio	0.7
Sharpe Ratio	1.45
Information Ratio	0
Alpha Ratio	0
Min Investment	1,000
Min SIP Investment	1,000
Exit Load	NIL
Yield to Maturity	6.81%
Effective Maturity	5 Years 1 Month 24 Days
Modified Duration	3 Years 10 Months 17 Days

Growth of 10,000 investment over the years.

Date	Value
30 Jun 20	₹10,000
30 Jun 21	₹10,542
30 Jun 22	₹10,857
30 Jun 23	₹11,573
30 Jun 24	₹12,381
30 Jun 25	₹13,498

Aditya Birla Sun Life Banking & 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 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 22 Jul 25

Duration	Returns
1 Month	0.7%
3 Month	1.7%
6 Month	5%
1 Year	9%
3 Year	7.6%
5 Year	6.1%
10 Year
15 Year
Since launch	7.9%

Historical performance (Yearly) on absolute basis

Year	Returns
2024	7.9%
2023	6.9%
2022	3.7%
2021	3.6%
2020	10.9%
2019	9.9%
2018	6.6%
2017	5.6%
2016	12.3%
2015	8.5%

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

Name	Since	Tenure
Kaustubh Gupta	29 Sep 09	15.76 Yr.
Harshil Suvarnkar	22 Mar 21	4.28 Yr.

Data below for Aditya Birla Sun Life Banking & PSU Debt Fund as on 15 Jul 25

Asset Allocation

Asset Class	Value
Cash	2.92%
Debt	96.78%
Other	0.29%

Debt Sector Allocation

Sector	Value
Corporate	61.08%
Government	35.82%
Cash Equivalent	2.82%

Credit Quality

Rating	Value
AAA	100%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
Power Grid Corporation Of India Limited Debentures \| -	5%	₹411 Cr	41,000
Power Finance Corporation Limited Debentures \| -	3%	₹304 Cr	30,000
Power Finance Corporation Limited Debentures \| -	3%	₹257 Cr	25,000
Small Industries Development Bank Of India Debentures \| -	3%	₹247 Cr	24,500
National Housing Bank Debentures \| -	2%	₹225 Cr	22,500
State Bank Of India Debentures \| -	2%	₹214 Cr	210
National Bank For Agriculture And Rural Development Debentures \| -	2%	₹205 Cr	20,000
HDFC Bank Limited Debentures \| -	2%	₹188 Cr	1,800
Rec Limited Debentures \| -	2%	₹168 Cr	16,500
Bajaj Finance Limited Debentures \| -	2%	₹168 Cr	16,500

5. 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 7.8% 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 (22 Jul 25)	₹24.2854 ↑ 0.01 (0.02 %)
Net Assets (Cr)	₹4,219 on 30 Jun 25
Category	Debt - Banking & PSU Debt
AMC	DSP BlackRock Invmt Managers Pvt. Ltd.
Rating	☆☆☆☆
Risk	Moderate
Expense Ratio	0.58
Sharpe Ratio	0.95
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	6.66%
Effective Maturity	7 Years 3 Months 18 Days
Modified Duration	4 Years 2 Months 8 Days

Growth of 10,000 investment over the years.

Date	Value
30 Jun 20	₹10,000
30 Jun 21	₹10,460
30 Jun 22	₹10,730
30 Jun 23	₹11,418
30 Jun 24	₹12,256
30 Jun 25	₹13,339

DSP BlackRock Banking and PSU Debt Fund SIP Returns

Total investment amount is ₹180,000
expected amount after 3 Years is ₹197,169.
Net Profit of ₹17,169 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 22 Jul 25

Duration	Returns
1 Month	0.8%
3 Month	1.3%
6 Month	4.8%
1 Year	9%
3 Year	7.6%
5 Year	5.9%
10 Year
15 Year
Since launch	7.8%

Historical performance (Yearly) on absolute basis

Year	Returns
2024	8.6%
2023	6.7%
2022	3.2%
2021	3.1%
2020	10.9%
2019	9.9%
2018	6.3%
2017	5.4%
2016	10.6%
2015	8.6%

Fund Manager information for DSP BlackRock Banking and PSU Debt Fund

Name	Since	Tenure
Sandeep Yadav	1 Aug 24	0.91 Yr.
Shantanu Godambe	1 Jun 23	2.08 Yr.

Data below for DSP BlackRock Banking and PSU Debt Fund as on 30 Jun 25

Asset Allocation

Asset Class	Value
Cash	13.25%
Debt	86.56%
Other	0.19%

Debt Sector Allocation

Sector	Value
Corporate	50.4%
Government	47.17%
Cash Equivalent	2.23%

Credit Quality

Rating	Value
AAA	100%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
7.34% Govt Stock 2064 Sovereign Bonds \| -	4%	₹183 Cr	17,500,000
8.3% Govt Stock 2042 Sovereign Bonds \| -	4%	₹180 Cr	15,000,000
7.81% Govt Stock 2033 Sovereign Bonds \| -	4%	₹159 Cr	15,000,000
7.09% Govt Stock 2054 Sovereign Bonds \| -	3%	₹134 Cr	13,000,000 ↑ 8,000,000
Small Industries Development Bank Of India Debentures \| -	3%	₹134 Cr	12,500
Power Grid Corporation Of India Limited Debentures \| -	3%	₹114 Cr	1,050
Indian Railway Finance Corporation Limited Debentures \| -	3%	₹111 Cr	1,000
State Bank Of India Debentures \| -	3%	₹109 Cr	100
6.9% Govt Stock 2065 Sovereign Bonds \| -	3%	₹109 Cr	11,000,000 ↑ 1,000,000
Power Grid Corporation Of India Limited Debentures \| -	3%	₹106 Cr	10,000

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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.