Among others, shares of Bank of India went up by 4.09 per cent, AXIS Bank (3.63 pc), Allahabad Bank gained (3.35 pc), SBI (3.27 pc), Bank of Baroda (3.19 pc) and PNB (2.98 pc).
The BSE bank index went up by 2.32 per cent to close at 25,831.15.
"Banks are in sweet spot due to new framework to deal with NPA and better quarter results," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.
A proposal to amend Section 35 A of the Banking Regulation Act through the ordinance route was approved by the Cabinet yesterday.
The amendment to the Banking Regulation Act will empower the RBI to issue direction to banks to recover non-performing assets (NPAs) from loan defaulters.
After the Cabinet meeting yesterday, Finance Minister Arun Jaitley said the government took some important decisions in respect of the banking sector.
Public sector banks (PSBs) are saddled with NPAs or bad loans to the tune of a staggering Rs 6 lakh crore.
Bad loans rose by over Rs 1 lakh crore in the first nine months of the last fiscal to Rs 6.07 lakh crore by December 31, 2016.
Gross NPAs of PSBs stood at Rs 5.02 lakh crore at the end of March 2016, up from Rs 2.67 lakh crore at the end of March 2015.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)