diff --git a/erpnext/accounts/doctype/bank_transaction/bank_transaction.py b/erpnext/accounts/doctype/bank_transaction/bank_transaction.py
index dcf6d44105c..f943b345810 100644
--- a/erpnext/accounts/doctype/bank_transaction/bank_transaction.py
+++ b/erpnext/accounts/doctype/bank_transaction/bank_transaction.py
@@ -36,6 +36,10 @@ class BankTransaction(StatusUpdater):
 			frappe.db.set_value(self.doctype, self.name, "allocated_amount", 0)
 			frappe.db.set_value(self.doctype, self.name, "unallocated_amount", abs(flt(self.credit) - flt(self.debit)))
 
+		amount = self.debit or self.credit
+		if amount == self.allocated_amount:
+			frappe.db.set_value(self.doctype, self.name, "status", "Reconciled")
+
 		self.reload()
 
 	def clear_linked_payment_entries(self):
diff --git a/erpnext/accounts/page/bank_reconciliation/bank_reconciliation.py b/erpnext/accounts/page/bank_reconciliation/bank_reconciliation.py
index f25c809a672..e9093847644 100644
--- a/erpnext/accounts/page/bank_reconciliation/bank_reconciliation.py
+++ b/erpnext/accounts/page/bank_reconciliation/bank_reconciliation.py
@@ -39,7 +39,9 @@ def add_payment_to_transaction(transaction, payment_entry, gl_entry):
 		"payment_entry": payment_entry.name,
 		"allocated_amount": allocated_amount
 	})
+
 	transaction.save()
+	transaction.update_allocations()
 
 @frappe.whitelist()
 def get_linked_payments(bank_transaction):
diff --git a/erpnext/patches.txt b/erpnext/patches.txt
index c060264a937..c6c3ae38b92 100755
--- a/erpnext/patches.txt
+++ b/erpnext/patches.txt
@@ -598,4 +598,5 @@ erpnext.patches.v11_1.set_salary_details_submittable
 erpnext.patches.v11_1.rename_depends_on_lwp
 erpnext.patches.v11_1.set_missing_title_for_quotation
 execute:frappe.delete_doc("Report", "Inactive Items")
-erpnext.patches.v11_1.delete_scheduling_tool
\ No newline at end of file
+erpnext.patches.v11_1.delete_scheduling_tool
+erpnext.patches.v11_1.update_bank_transaction_status
\ No newline at end of file
diff --git a/erpnext/patches/v11_1/update_bank_transaction_status.py b/erpnext/patches/v11_1/update_bank_transaction_status.py
new file mode 100644
index 00000000000..1acdfcccf9f
--- /dev/null
+++ b/erpnext/patches/v11_1/update_bank_transaction_status.py
@@ -0,0 +1,15 @@
+# Copyright (c) 2015, Frappe Technologies Pvt. Ltd. and Contributors
+# License: GNU General Public License v3. See license.txt
+
+from __future__ import unicode_literals
+import frappe
+
+def execute():
+    frappe.reload_doc("accounts", "doctype", "bank_transaction")
+
+    frappe.db.sql(""" UPDATE `tabBank Transaction`
+        SET status = 'Reconciled'
+        WHERE
+            status = 'Settled' and (debit = allocated_amount or credit = allocated_amount)
+            and ifnull(allocated_amount, 0) > 0
+    """)
\ No newline at end of file