Bank stocks on Wednesday took a severe beating in the stock market, falling as much as 9 per cent in morning trade, after the RBI announced additional liquidity tightening measures to check Rupee slide.

Blue chips PNB tumbled 5.58 per cent, while ICICI Bank was down 4.63 per cent, SBI by 3.81 per cent and HDFC Bank by 3.26 per cent.

Yes Bank tanked 8.6 per cent, while Bank of India slipped 7.61 per cent, Canara Bank by 6.39 per cent, Axis Bank by 6.13 per cent and Kotak Mahindra Bank by 5.56 per cent.

Following the weakness in these stocks, the BSE banking index plunged 4.44 per cent to 12,260.52 and was the top loser among the 13 sectoral indices.

With the Rupee continuing to be weak, the Reserve Bank on Tuesday announced additional liquidity tightening measures to contain excessive speculation and volatility in the foreign exchange market.

RBI has reduced the liquidity adjustment facility (LAF) for each bank from 1 per cent of the total deposits to 0.5 per cent, thus limiting the access to borrowed funds from the Central Bank. The limit will come into force with immediate effect and continue till further notice, the RBI has said.

In another measure to suck out liquidity from the system, RBI has asked banks to maintain higher average Cash Reserve Ratio (CRR) of 99 per cent of the requirement on daily basis as against earlier 70 per cent. CRR is portion of deposits that banks are required to keep with the RBI.