Shares in banks such as the State Bank of India rise 1.2 percent, recovering from an earlier fall of as much as 2.8 percent.
Gains fuelled by expectations the banking amendment bill will pass parliament after the government dropped a controversial clause that would have allowed banks to trade in commodity futures.
Among other banks, ICICI Bank is up 0.8 percent, while Bank of India gained 2.4 percent.
Parliament is expected to amend the banking laws that include raising the limit on shareholders' voting rights in public and private sector banks, a step seen largely positive towards the government's reform drive.
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