Demenetisation impact: Bank stocks surge up to 12%, PNB zooms 11.9%

New Delhi: Bank stocks rose sharply by up to 12 percent today after the government's decision to withdraw Rs 500 and Rs 1,000 currency notes from circulation to curb black money and terror funding.

Shares of PNB zoomed 11.86 percent, Bank of Baroda surged 9.03 percent and SBI soared 8.41 percent on BSE.

Bank of Maharashtra (9.52 percent), Allahabad Bank (8.25 percent), Canara Bank (6.74 percent), Yes Bank (5.86 percent), Federal Bank (5.51 percent), ICICI Bank (3.91 percent), AXIS Bank (3.85 percent), and HDFC Bank (1.94 percent) -- all moved up.

The BSE bank index rose by 3.63 percent to end at 23,185.59.

"Banking sector is expected to benefit as more money will flow into the formal sector. We expect banks to benefit in terms of more deposits, especially low cost deposits. However, in the near term, banks may witness higher stress on assets in the real estate sector," said Kamlesh Rao, CEO, Kotak Securities.

Banks have been ordered to remain open on the weekend as well as function late till 9 PM for three days beginning today to cope with the huge rush of people exchanging 500 and 1,000 denomination notes which have been banned by the government.

The BSE Sensex rose by 265.15 points to end at 27,517.68.