At around 12.09 pm, Nifty Bank was trading at 33,565.55 nosediving by 618.85 points or 1.81%.
RBL Bank and IDFC First Bank were top underperformers tumbling by nearly 3%.
However, heavyweight SBI weighed down most by slipping nearly 3% as well. Other heavyweights like Axis Bank and ICICI Bank dived bt 2.3% and 2.2% respectively.
Other major stocks like Bank of Baroda, IndusInd Bank, Federal Bank and Kotak Bank dropped between 1.5-2%.
While HDFC Bank and Bandhan Bank skidded by nearly 1% each.
Nifty PSU Bank was performing at 2,195 down by 1.4%, while the Nifty Private Bank traded at 17,991.65 lower by 1.7%.
In the latest verdict on loan moratorium, the SC said that compound interest, interest on interest or penal interest should not be charged on EMIs due during the loan moratorium period starting from March 1 to August 31 last year.
Also, the court has vacated its interim order which banned banks from declaring accounts during the moratorium period, as NPAs. Moreover, the apex court has also refused to extend the petitioners plea for extending the moratorium period.