Public sector lenders gained on Wednesday as RBI eased rules on what lenders can count as Basel-III capital.
State Bank of India, Bank of Baroda, and Punjab National Bank rose 6-9 per cent.
HSBC says the measures provide a "breather" for state-owned lenders.
The S&P BSE Bankex index gained as much as 3.9 per cent. It was down 15 per cent this year as of Tuesday's close.
At 10.30 am the SBI share was trading up 9.28 per cent at Rs 177.25 on the BSE, while BoB was up 9.26 per cent at Rs 148.70 and PNB was up 6.25 per cent at Rs 78.25.