IDFC shares were up 12.5 percent for the week as of 1236 India time (0707 GMT) after hitting their highest in nearly 14 months on Thursday, marking the biggest weekly gain since a 15.4 percent surge in the week ended on May 23, 2014.
Analysts attributed the share gains to Indian Finance Minster Arun Jaitley's budget proposal to allow banks raising long-term funds to earn some exemptions from requirements that mandate all lenders must deposit cash or bonds with the central bank, although he did not provide details.
IDFC was one of two winners of a banking license in April.
"IDFC has the best knowledge of lending to infrastructure and therefore is positioned to benefit the most along side other lenders from this move," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.
Being exempt from reserve requirements could boost IDFC's return on equity and return on assets by at least 2-3 percentage points, according to analysts, although much will depend on how final rules are implemented.
The infrastructure sector lender had a loan book of nearly 600 billion rupees of which nearly half were infrastructure project loans, as per the company's annual report for 2013-14.
IDFC shares rose as much as 4.4 percent on Friday, adding to Thursday's 8.7 percent gain after the budget proposal. Shares were last down 1.2 percent compared with the NSE's 0.8 percent fall.