Bank stocks surged on RBI's decision to cut the statutory liquidity ratio by 50 bps.

The decision, announced at the same time the RBI kept the repo rate unchanged at 6.00 percent, is meant to spur banks into lending more, but it would mean increased supply at a time of ample liquidity.

The RBI said it would reduce banks' statutory liquidity ratio by 50 bps to 19.5 per cent from the fortnight starting October 14.

Kotak Mahindra Bank jumped 2.16 per cent to Rs 1,028, YES Bank (+1.55 per cent to Rs 356.05), SBI (+0.82 per cent to Rs 253.35), IndusInd Bank (+0.37% to Rs 1,696.90) and PNB (+0.39% to Rs 130.20).