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Top PSU Bank ETFs in India (2026)

Public sector banks play a significant role in India’s financial system, influencing credit delivery, infrastructure financing, and economic activity. Indices built around these lenders group them into transparent, rules-based baskets. PSU Bank ETFs translate this segment into an exchange-traded format, allowing market participants to track collective movements efficiently. This article explains how PSU Bank ETFs operate, outlines their advantages and risks, and highlights the practical factors that shape performance.

List of Best PSU Bank ETFs in India for 2026

PSU Bank ETF Stock Screener

PSU Bank ETF Stock Screener: Analyse & Filter Indian Stocks on Tickertape

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NameStocks (7)Sub-SectorSub-SectorMarket CapMarket CapClose PriceClose PricePE RatioPE Ratio1D Return1D Return1M Return1M Return6M Return6M Return1Y Return1Y ReturnPB RatioPB RatioReturn on EquityReturn on EquityROCEROCEDividend YieldDiv YieldDebt to EquityDebt to EquityVolatility vs NiftyVolatility vs Nifty
1.Nippon India ETF Nifty PSU Bank BeESPSUBNKBEESEquityEquity382.46382.46104.14104.14--0.500.504.774.7736.5436.5459.3659.36------0.000.00--1.771.77
2.Kotak Nifty PSU Bank ETFPSUBANKEquityEquity176.23176.23938.69938.69--0.660.665.255.2536.7336.7359.2759.27------0.000.00--1.671.67
3.Mirae Asset Nifty PSU Bank ETFBANKPSUEquityEquity38.4738.4794.1494.14--0.480.483.283.2836.8336.8359.6959.69----------1.681.68
4.HDFC NIFTY PSU BANK ETFHDFCPSUBKEquityEquity33.0833.0894.4694.46--0.450.454.864.8636.4036.4059.9459.94----------1.631.63
5.DSP Nifty PSU Bank ETFPSUBANKADDEquityEquity22.7922.7994.1094.10--0.460.464.844.8436.6936.6959.8259.82----------1.681.68
6.ICICI Prudential Nifty PSU Bank ETFPSUBNKIETFEquityEquity15.0615.0694.9194.91--0.790.795.135.1336.8436.8459.9459.94----------1.681.68
7.SBI BSE PSU BANK ETFSBIBPBEquityEquity9.869.8654.0754.07--0.500.504.694.6935.4835.4849.8649.86----------1.731.73

Disclaimer: Please note that the above table is for informational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.

Selection criteria: Sub-sector: Gold | Market Cap: Sorted from Highest to Lowest

What are PSU Bank ETFs?

PSU Bank ETFs are exchange traded funds that track indices composed of publicly owned banking institutions. These ETFs usually include lenders where the government holds a majority stake, and they mirror movements in the public sector banking segment. Investors access diversified exposure to PSU banks through a single unit traded on the exchange.

Overview of Top PSU Bank ETFs in India

Nippon India ETF Nifty PSU Bank BeES

This ETF tracks the Nifty PSU Bank Index and provides exposure to government-owned banks listed on Indian exchanges. The portfolio reflects sector movements driven by credit growth, asset quality trends, and policy developments. Investors trade units intraday while holding diversified public sector banking exposure.

Kotak Nifty PSU Bank ETF

The fund replicates the Nifty PSU Bank Index by holding constituent banks in similar weights. Performance responds to developments in lending activity, capital adequacy, and regulatory direction. Through exchange trading, investors participate in the public sector banking theme using a single instrument.

Mirae Asset Nifty PSU Bank ETF

This ETF mirrors the Nifty PSU Bank Index and builds exposure to state-owned lenders. Portfolio behaviour often reflects government policy initiatives, recapitalisation measures, and changes in credit demand. Units trade on the exchange, enabling transparent access to the segment.

HDFC NIFTY PSU BANK ETF

The ETF aims to match the performance of the Nifty PSU Bank Index. It represents banks where the government maintains significant ownership. Market pricing changes with shifts in interest rates, loan growth, and sector profitability while investors transact in demat form.

DSP Nifty PSU Bank ETF

This fund follows the Nifty PSU Bank Index and allocates across leading public sector banks. Returns typically align with trends in asset quality, provisioning cycles, and economic momentum. Exchange liquidity allows investors to gain thematic exposure efficiently.

How to Invest in PSU Bank ETFs?

Here’s how you can invest in PSU ETFs using Tickertape -

  1. Create an account on the Tickertape or log in if you already have one.
  2. Open PSU Bank ETFs Screener
  3. You can review this data to evaluate each ETF’s performance trends and determine whether they align with your investment thesis.
  4. Once you’ve decided on an ETF, you can place a buy order through your brokerage account linked to Tickertape.

Further, you can analyse your overall portfolio and potential red flags in it by connecting it to Tickertape. Check out detailed analysis of your portfolio now!

Taxation on PSU ETF

Investors pay tax on profits earned from selling equity ETFs. The tax rate changes based on how long the ETF units were held. The summary below explains the applicable rates.

Holding Period Tax Treatment
Short-Term (< 12 months) Gains taxed at a flat rate of 20%.
Long-Term (> 12 months) Gains taxed at 12.5%. Exemption applies to the first ₹1.25 lakh of long-term gains across all equity assets in a financial year.

Advantages of Investing in PSU Bank ETFs

PSU Exposure

PSU ETFs track an index such as the Nifty PSU Bank Index, which holds government-owned lenders like SBI, Bank of Baroda, and Union Bank. This gives investors targeted exposure to the performance of state-owned banks through one unit without buying each constituent individually.

Transparent Index-Based Construction

These ETFs follow a defined basket where weights reflect market capitalisation within the PSU banking universe. Because constituents and weights are published, investors can see exactly how banks such as SBI or Canara Bank contribute to performance.

Underlying Liquidity

Top PSU Bank ETF constituents (SBI, Bank of Baroda) rank among the most traded stocks in the banking segment. ETFs typically benefit from this underlying liquidity, which supports tighter spreads and smoother execution relative to niche small-cap thematic funds.

Risks of Investing in PSU Bank ETFs

High Concentration

PSU Bank indices tend to have heavy weights in a small number of large government banks. In downturns tied to asset quality stress or sector-specific challenges, this concentration can amplify drawdowns relative to broader market ETFs.

Sector-Specific Sensitivity

Factors that directly affect banks — such as credit growth cycles, loan loss provisions, interest rate margins, and policy actions — tend to influence PSU Bank ETF returns more than diversified indices. For example, extended weak credit off-take or higher provisions across public sector banks can dampen ETF performance.

Policy Exposure

Government decisions on bank recapitalisation, asset quality recognition norms, or PSU consolidation materially influence constituent performance. PSU ETFs can therefore exhibit higher event-driven volatility compared with broad indices.

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Factors to Consider Before Investing in PSU Bank ETFs

Weight Structure

The structure of the tracked index determines how exposure distributes among PSU banks. Frameworks that assign larger allocations to SBI or other dominant institutions can display performance patterns that differ from more evenly weighted approaches, especially during sector rotations.

Liquidity and Bid-Ask Spreads

Average traded volume and prevailing spreads provide insight into exchange execution conditions. PSU Bank ETFs often inherit liquidity characteristics from major constituents, yet transaction costs can still vary across products and issuers.

Rate Environment

Public sector banks derive a significant portion of income from net interest margins and loan expansion. As a result, ETFs linked to this segment tend to show higher sensitivity to movements in rates, yield curves, and trends in asset quality compared with broad-market exposures.

Conclusion

PSU Bank ETFs package exposure to government-owned lenders into a single tradable structure. Index weights, concentration in large banks, and sensitivity to credit and policy cycles can strongly influence how the PSU bank ETF share price behaves. While diversification spans several institutions, sector-specific developments remain central to return behaviour.

Investors can examine holdings, weight distribution, and liquidity metrics through the Tickertape Stock Screener to better understand how these ETFs react across changing market environments.

Frequently Asked Questions on PSU Bank ETFs

  1. What is PSU bank ETF?

    A PSU ETF is an exchange traded fund that tracks an index of government-owned banks. The fund holds constituent lenders in proportions similar to the benchmark, allowing investors to gain exposure to the public sector banking segment through a single unit traded on the exchange.

  2. Which PSU bank ETF is good?

    The following are the best PSU bank ETFs based on 1-year returns:
    1. DSP Nifty PSU Bank ETF
    2. Mirae Asset Nifty PSU Bank ETF
    3. HDFC NIFTY PSU BANK ETF
    4. Kotak Nifty PSU Bank ETF

    Disclaimer: Please note that this PSU Bank ETF list is not a recommendation. Please do your own research or consult your financial advisor before investing.

  3. How does a PSU ETF works?

    The ETF invests in shares of public sector banks according to index weights. When stock prices of these banks change, the PSU bank ETF share price adjusts accordingly. Fund managers rebalance holdings during index reviews to maintain alignment with the benchmark.

  4. What are the advantages of investing in PSU bank ETFs?

    PSU bank ETFs combine exposure to multiple government-owned lenders in one transaction. The rule-based structure makes portfolios transparent, and exchange trading offers intraday liquidity and market-driven pricing.

  5. What are the risks associated with investing in PSU bank ETFs?

    Returns depend heavily on banking sector conditions. Asset quality trends, credit growth, interest rate movements, and policy decisions can influence performance. Larger banks in the index may also exert greater impact due to higher weights.