Zerodha Fund House has launched the Zerodha BSE Top 10 Banks ETF, an open-ended exchange-traded fund that seeks to track the performance of the BSE Top 10 Banks Index. According to reports from The Economic Times, the new fund offer (NFO) opened on October 12, 2026, and will close on October 26, 2026. Investors can subscribe with a minimum investment of ₹1,000 and in multiples of ₹1,000 thereafter. The ETF allows investors to gain exposure to India's largest banking stocks through a single investment without having to purchase each bank's shares individually.
The BSE Top 10 Banks Index comprises the largest banks in the BSE 500, selected on the basis of free-float market capitalisation. As reported by The Economic Times, India has 41 listed banks, and the 10 banks represented in the index account for approximately 89% of the free-float market value of the banking sector. The index includes both private and public sector banks, with constituent weights reflecting their relative size, subject to applicable limits. The ETF provides focused banking exposure without requiring investors to purchase each bank's shares individually.
According to Zerodha Fund House, several major banks in the index are trading below their respective five-year average price-to-book value ratios. The price-to-book ratio compares a bank's market valuation with its book value, making it one of the metrics investors use to assess banking stocks. However, a valuation below the historical average does not necessarily mean a stock is undervalued or that its price will rise. The ETF is designed for investors who want focused banking sector exposure as part of their investment portfolio.
During the NFO period, investors can subscribe through Coin by Zerodha and MyCAMS. After listing on stock exchanges, investors will be able to buy and sell units during market hours through a stockbroker using a demat account. The minimum exchange-traded purchase will be one unit, subject to the scheme's listing and trading arrangements. As outlined in the fund house's announcement, gains on units held for up to one year are classified as short-term capital gains and taxed at 20%, plus applicable cess and surcharge. Gains on units held for more than one year are classified as long-term capital gains, with gains of up to ₹1.25 lakh in a financial year exempt from tax and gains above that threshold taxed at 12.5%, plus applicable cess and surcharge.
The ETF may be suitable for investors with a long-term investment horizon who want to add a dedicated banking allocation beyond their core portfolio. However, as noted by Zerodha Fund House, because it concentrates on a single sector, it carries sector-specific risks and may be more volatile than a diversified equity fund. The scheme information document emphasizes that the ETF provides exposure to a concentrated basket of banking stocks and does not guarantee returns, requiring investors to review their risk appetite and existing portfolio allocation before investing. Since the scheme tracks a sector-specific index, its performance will depend on the performance of the underlying banking stocks and the broader banking industry.
