Mumbai: Shares of non-banking financial companies (NBFC) and banks surged as much as 14 per cent after the Lok Sabha passed a Bill paving way for foreign investments in the sector and establishment of new private banks.

Shares of Edelweiss Financial Services soared by 13.96 per cent to Rs 40, while Religare Enterprises zoomed up by 9.71 per cent to Rs 342.70 on the BSE.

Among others, Bajaj Finserv was up 4.79 per cent, Mahindra and Mahindra Financials rose by 3.41 per cent, Shriram Transport Finance (3.16 per cent), IDFC (2.69 per cent) and L&T Finance Holdings (1.62 per cent).

In the banking space, Bank of India was trading higher by 1.54 per cent and SBI (0.47 per cent).

"The long-awaited passing of Banking Bill is an important step towards reforming India's financial sector and greater financial inclusion," Chairman and CEO of Edelweiss Group Rashesh Shah said.

The Bill will allow RBI to supersede boards of private sector banks and increase the cap on voting rights of private investors in PSBs to 10 per cent, from 1 per cent.

RBI wanted the government to amend the banking laws before starting the process towards issuance of new banking licences.

According to Religare Capital Markets report, "The approval of Banking Bill is positive as it would strengthen RBI's regulatory oversight over banks and pave way for new banking licences. Increase in voting rights for private sector banks to 26 per cent from 10 per cent at present is also incrementally positive in our view."