India's NSE bank index fell as much as 6.6 %after Reserve Bank of India Governor Raghuram Rajan surprised markets in his maiden policy review on Friday by raising interest rates to ward off rising inflation.
Analysts tracking the sector say this is likely to hit growth further as RBI has chosen inflation over growth in its growth-inflation dynamics.
Among large caps, ICICI Bank Ltd shares fall 5.2 %while Axis Bank Ltd drops 6 %
Banks dependent on wholesale deposits also fall. Yes Bank Ltd plunges 9 %, while Indusind Bank Ltd is down 6.2 %.
In state-owned banks, State Bank of India Ltd falls 5.3 %, while Bank of Baroda Ltd is down 5.4 %.