NSE bank index rose as much as 4.3 pct to life high of 19,410.40.
The Reserve Bank of India cut interest rates on Thursday by 25 basis points to 7.75 percent in a surprise inter-meeting cut.
Rate cut seen stoking credit growth and lowering costs for lenders, say analysts.
Possibility of 50-100 bps cut in rates over next few quarters, believe fund managers.
India finmin welcomes RBI rate cut as inflation drops.
ICICI Bank gains as much as 5.7 pct while State Bank of India rises as much as 6.2 pct.