India’s private banks have become a strong pillar of the country’s economy. From profits to asset quality, they have shown consistent performance over the years. Now, retail investors can ride their growth with ease, thanks to the latest mutual fund launch by ICICI Prudential.
Starting from 1st July 2025, the ICICI Prudential Nifty Private Bank Index Fund NFO (New Fund Offer) gives investors a simple and affordable way to invest in India’s leading private banks. This open-ended index scheme will remain open till 14th July 2025.
Let’s understand what makes this scheme a strong investment choice.
What is the ICICI Nifty Private Bank Index Fund?
This mutual fund scheme aims to mirror the performance of the Nifty Private Bank Total Return Index (TRI). That means the fund will directly invest in the same stocks and same proportion as in this index, ensuring that the returns closely follow the index performance.
This makes it a passive investment, ideal for those who want exposure to the banking sector without the need to pick individual stocks.
Which Stocks Are in the Portfolio?
The fund will invest in the top 10 private banks based on market cap and liquidity. Here’s a breakdown of the current stock weightage (as per Nifty Private Bank Index):
- ICICI Bank – 21.48%
- HDFC Bank – 21.41%
- Axis Bank – 19.13%
- Kotak Mahindra Bank – 19.05%
- IndusInd Bank – 4.79%
- Federal Bank – 4.36%
- IDFC First Bank – 4.01%
- Yes Bank – 3.20%
- Bandhan Bank – 1.34%
- RBL Bank – 1.23%
These banks represent a large portion of India’s private banking ecosystem and play a key role in credit growth and financial inclusion.
Historical Performance of the Index
Although this fund is new, its benchmark has a strong track record. The Nifty Private Bank Index has delivered the following returns (as of mid-2025):
- 1-Year Return: 8.96%
- 5-Year Return (CAGR): 19.89%
- Since Inception (2016): 18.86% CAGR
This performance clearly shows how private banks have grown faster than the broader market. The index has outperformed the Nifty 50 TRI, which has a 3-year CAGR of 18.5%.
Minimum Investment and Other Key Details
- Minimum lump sum investment: ₹1,000
- SIP and STP options: Available
- Lock-in period: None
- Exit Load: Zero
- Demat Account Needed: No
Anyone with a valid PAN card and KYC can invest in this scheme. No demat account is required, which makes it accessible for new investors too.
Why Invest in Private Banks?
According to ICICI Prudential, private banks have become a growth engine for India. Their share in the loan market has grown from 13% in 2005 to 36% in 2025. In deposits, their share has also jumped from 11% to 32% in the same period.
In FY2025, these banks contributed 37% of total Nifty 50 profits, even though they made up just 28% of its market value. This shows how efficient they are in converting business into real profit.
Also, in terms of valuation, private banks are still more affordable than many other sectors. The P/E ratio is 17.6 and P/B ratio is 2.4, both lower than the Nifty 50’s P/E of 22.3 and P/B of 3.6.
Expert View
Abhijeet Shah, Chief Marketing and Digital Business Officer at ICICI Prudential AMC, said this fund provides a low-cost and easy entry into a sector that has been delivering strong earnings and growth for years. He believes that this NFO is a timely option for investors looking at long-term wealth creation through banking sector exposure.
The fund will be managed by Nishit Patel and Ashwini Shinde, who will ensure that the scheme remains aligned with the benchmark index.
Who Should Consider This Fund?
- First-time investors looking for a sector-specific investment.
- Those who want passive exposure to top Indian private banks.
- Long-term investors target steady growth with less volatility.
- Investors without demat accounts who want to enter mutual funds.
The scheme may suit you if you believe India’s private banking sector will continue its upward journey.
