Cash transactions stopped at nearly 40 branches in sensitive areas of Pulwama and Shopian districts in South Kashmir.
The step has been taken following an advisory issued by security agencies asking the banks operating in the two districts to stop cash deliveries apprehending more attacks.
The cash transactions have been stopped at the branches belonging to the Jammu and Kashmir Bank and Ellaquai Dehati Bank, which were targeted by militants recently.
A senior official of Jammu and Kashmir Bank said all other banking operations including ATM services would continue in these areas.
Other banking operations, including cashless transactions and ATM services, will continue to take place.