Nifty PSU Bank, Private Bank and Financial Services indexes also fell between 3-5 per cent.
Banking shares dropped on Monday as rising coronavirus infections in the country stoked fears that loan defaults may rise as renewed lockdowns to curb the spread of infections would hamper the economic activity. The gauge of 12 banking shares on the National Stock Exchange - Nifty Bank index - slumped as much as 4.91 per cent or 1,572 points to hit an intraday low of 30,405.65.
Hit by the second Covid wave, India recorded 2,73,810 fresh infections and 1,619 deaths in a new record high in the past 24 hours, taking the caseload to 1.5 crore; 1.78 lakh people have died so far. This is the fifth straight day that over 2 lakh cases were reported.