Ten banks account for about 89% of the free-float market value of India’s 41 listed banks. Zerodha Fund House has bundled these lenders into a single exchange-traded fund (ETF), giving investors a way to invest in the country’s largest banking stocks through one product.
The Zerodha BSE Top 10 Banks ETF is an open-ended fund that aims to track the BSE Top 10 Banks Index. Its new fund offer (NFO) opened on October 12 and will close on October 26, 2026.
The index selects the largest banks in the BSE 500 by free-float market capitalisation and includes both private and public sector lenders. The ETF invests in all 10 banks in proportion to their size, subject to applicable limits. This allows investors to access the basket without buying each stock individually.
Zerodha Fund House is also highlighting the valuations of the banks in the index. It says several major lenders are trading below their five-year average price-to-book value ratios. This means investors are paying less for each rupee of a bank’s book value than they have, on average, over the past five years.
Also read: Zerodha was built with just ₹10 lakh: Nithin Kamath
The fund house has also pointed to the banking sector’s role in financing India’s economy. Banks have increased lending to agriculture and allied activities, industry, services and personal loans over the past few years.
“Banks support India’s economic growth by providing credit and enabling payments across the economy, and investors might already have a view on the sector,” said Vishal Jain, CEO of Zerodha Fund House. “The ETF gives them a transparent way to hold India’s largest banking stocks in a single fund.”
The fund house says the ETF may suit long-term investors seeking exposure to banking alongside their core investment portfolio.
How to invest in Zerodha’s bank ETF
During the NFO, the minimum investment is ₹1,000, with additional investments in multiples of ₹1,000. Investors can apply through Coin by Zerodha and MyCAMS.
After the ETF is listed on the stock exchanges, investors can buy and sell units during market hours through any stockbroker using a demat account. The minimum exchange-traded lot is one unit.
Also read: How NSE helped Zerodha get off the ground, according to Nithin Kamath
How are gains from the ETF taxed?
Gains on investments held for up to one year are treated as short-term capital gains and taxed at 20%, plus a 4% cess and any applicable surcharge.
For investments held for more than one year, long-term capital gains are tax-free up to ₹1.25 lakh in a financial year. Gains above that threshold are taxed at 12.5%, plus cess and any applicable surcharge.
Investors should consult a tax adviser, as the final tax implications depend on their individual circumstances.