More than 200,000 bank officers began a one-day strike on Friday to demand a wage increase, a move unions said would halt banking operations.

Indian Banks' Association, a group representing bank owners, said it hoped some branches would operate.

"Salary negotiations are going very slow. Perhaps after this strike, the government may direct the IBA to decide a date for negotiations," Shantha Raju, general secretary of All India Bank Officers' Confederation, told Reuters.

The strikers include officers in state-run banks, which account for around 70 per cent of all bank deposits and loans. They include the country's largest commercial bank, State Bank of India, and other large banks such as Bank of India and Punjab National Bank.

Officials said the strike would cripple clearing, trading and retail operations.

"We hope that some of the branches will open for operations. Much will depend on the workmen who are not taking part in the strike," said Dalbir Singh, IBA chairman.

About 225,000 are officers out of 800,000 employees in the country's banking sector, Raju said.

"Most dealers at state-run banks, including our bank, will not be around," said a forex dealer at a government-owned bank. "Even if the front office strikes some deals, the back office staff will not be there to put the transactions through."

State-run banks are the biggest lenders in the daily Rs 200 billion ($4.2 billion) overnight call money market and control over 75 per cent of the deals in the $5 billion-a-day foreign exchange market.

Trading in government securities has also ground to a halt because state-run banks are the largest investors, dealers said.

Although foreign and private-sector banks are likely to trade, volumes will probably be thin. Raju said officers at most private sector banks are expected to participate in the strike.

Officers at the central Reserve Bank of India are not joining the protest.

Meanwhile, trading activity was adversely affected at the Interbank Foreing Exchange Market early on Friday.