How BANKNIFTY include or exclude the Banking stocks ?

If you ever wonder how BANKNIFTY selects the Banking stocks so Here is the answer:

The NIFTY Bank Index comprises of the most liquid and large Indian Banking stocks. It provides investors and market intermediaries
a benchmark that captures the capital market performance of the Indian banks. The Index comprises of maximum 12 companies listed
on National Stock Exchange of India (NSE).
NIFTY Bank Index is computed using free float market capitalization method.
NIFTY Bank Index can be used for a variety of purposes such as benchmarking fund portfolios, launching of index funds, ETFs and
structured products.
Index Variant: NIFTY Bank Total Returns Index.

currently Banking stocks in BANKNIFTY are :
SBIN
INDUSINDBK
AXISBANK
ICICIBANK
HDFCBANK
RBLBANK
KOTAKBANK
BANDHANBNK
BANKBARODA
PNB
FEDERALBNK
IDFCFIRSTB

INDEX METHODOLOGY
Eligibility Criteria for Selection of Constituent Stocks:
i. Companies should form part of NIFTY 500 at the time of review. In case, the number of eligible stocks representing a particular
sector within NIFTY 500 falls below 10, then deficit number of stocks shall be selected from the universe of stocks ranked within top
800 based on both average daily turnover and average daily full market capitalisation based on previous six months period data used
for index rebalancing of NIFTY 500.
ii. Companies should form a part of the Banking sector.
iii. The company's trading frequency should be at least 90% in the last six months.
iv. The company should have a listing history of 6 months. A company which comes out with an IPO will be eligible for inclusion in
the index, if it fulfills the normal eligibility criteria for the index for a 3 month period instead of a 6 month period.
v. Companies that are allowed to trade in F&O segment are only eligible to be constituent of the index.
vi. Final selection of 12 companies shall be done based on the free-float market capitalization of the companies.
vii. Weightage of each stock in the index is calculated based on its free-float market capitalization such that no single stock shall be
more than 33% and weightage of top 3 stocks cumulatively shall not be more than 62% at the time of rebalancing.
Index Re-Balancing:
Index is re-balanced on semi-annual basis. The cut-off date is January 31 and July 31 of each year, i.e. For semi-annual review of
indices, average data for six months ending the cut-off date is considered. Four weeks prior notice is given to market from the date of
change.
Index Governance:
A professional team manages all NSE indices. There is a three-tier governance structure comprising the Board of Directors of NSE
Indices Limited, the Index Advisory Committee (Equity) and the Index Maintenance Sub-Committee.

References : NSE INDIA official website