Police said the militants, whose number was not clear yet, barged into the Jammu and Kashmir Bank branch at Rantipora in Pulwama district.
They looted Rs 11 lakh -- Rs 16,000 in demonetised notes and rest in valid currency, police said.
Soon after the incident, police arrived on the spot but local residents started pelting stones at them, he said.
This is third bank robbery by militants since Prime Minister Narendra Modi announced scrapping of Rs 500 and Rs 1000 notes on November 8.
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They decamped with nearly Rs 10 lakh from the bank.
Prior to that on November 21, suspected militants robbed a bank in Chrar-e-Sharief area of central Kashmir's Budgam district, decamping with nearly Rs 13 lakh cash.
The Prime Minister, after announcing demonetisation, had said one of the reasons for the decision was to choke funds to militants.