The Reserve Bank of India has increased the interest rates now. With regards to banking and PSU funds, a universal/one-size-fits-all answer may not be possible here. This is because even within the banking and PSU category, there are different funds that maintain very different maturity profiles ranging from 0.4 to seven years (as of March 2022).
One should prefer to be towards the lower end of the maturity curve in a rising interest rate environment - that should, generally, be the guiding principle. This is because the funds with higher maturity would fall more in a rising rate environment and also the reinvestment opportunity at higher rates comes much later for such funds. Funds with lower duration, on the other hand, can redeploy the money sooner once their existing bonds mature.
From that standpoint, it is desirable to remain towards the shorter end of the maturity curve, until and unless you have a long investment horizon and are okay with interim volatility.
If your banking and PSU fund has a maturity profile of two to three years (and it remains there), it is fine. However, if your fund's maturity is on the higher side, it can subject you to steeper volatility. If that unnerves you and your investment horizon is not that long, then you should consider switching out.
Suggested watch: What to do in a rising interest rate environment?