SBI Mutual Fund's Banking and PSU Debt Fund, launched on January 1, 2013, invests primarily in debt instruments issued by banks and public sector undertakings. The Direct-IDCW Daily plan carries a NAV of ₹1,556.91 and has delivered a 7.77% return since launch. Benchmarked against the Nifty Banking & PSU Debt Index A-II, the fund carries a moderate riskometer rating, making it a relatively conservative fixed-income option within the mutual fund universe.

Banking and PSU Debt Funds are an SEBI-defined open-ended debt mutual fund category mandated to invest at least 80% of their corpus in debt instruments of banks, public sector undertakings, public financial institutions, and municipal bodies. This mandatory concentration in high-credit-quality issuers — entities backed by sovereign or quasi-sovereign standing — gives the category its moderate risk profile.

The fund's benchmark, the Nifty Banking & PSU Debt Index A-II, tracks bonds with residual maturity between one and three years, signalling a short-to-medium duration tilt. Duration management is central to debt fund performance: when interest rates rise, bond prices fall, affecting NAV; when rates fall, NAV appreciates.

The IDCW (Income Distribution cum Capital Withdrawal) option replaced the older 'Dividend' label following SEBI's October 2020 reclassification circular, which mandated that any payout must be sourced from realised gains, not capital. Daily IDCW means the fund declares distributions every business day, appealing to investors seeking regular cash flows.

For exam purposes, key regulatory touchpoints include: SEBI's mutual fund categorisation circular (October 2017) that created distinct debt fund categories; the 80% minimum investment rule for Banking & PSU funds; and the IDCW nomenclature change (2020). These norms sit squarely in the SEBI and RBI exam syllabus on capital markets and debt market regulation.