Private lender YES Bank [ Get Quote ] has initiated talks with Royal Bank of Scotland to acquire the latter's retail assets in India.
The move comes after RBS failed to close a deal involving sale of its India retail assets to Hongkong and Shanghai Banking Corporation.
The deal was called off in November last year.
"Discussions are on. It is still at an early stage and nothing has been finalised so far," a senior banker said, requesting not to be named.
In India, RBS has 31 branches that it got when a three-bank consortium, of which it was a part, acquired Dutch bank ABN Amro in 2007.
It was the largest acquisition in the global financial sector at then.
The value of the retail and commercial banking assets of RBS in India was estimated at around $1.8 billion at the end of March 2010.
"The valuation will depend on the quality of assets.
"It is premature to discuss it now," another banker said, confirming YES Bank's interest in RBS' retail assets in the country.
The move is in line with YES Bank's strategy to expand its retail banking business aggressively.
The bank recently roped in Pralay Mondal from HDFC Bank [ Get Quote ] to oversee its retail banking operations.
The private lender has also entered into new areas of retail lending in recent months.
For instance, it has entered into a partnership with American Express Banking Corporation to sell co-branded credit cards to high-networth clients.
In November 2012, RBS had said its India retail and commercial operations accounted for less than 0.5 per cent of its non-core assets and it would continue to wind down this business. It had not offered any more detail on the value of the assets.
It is learnt RBS also held discussions with a few other Indian banks for the sale.
"RBS is reviewing all its options in the best interest of its clients," a spokesperson of the bank said in an emailed response. YES Bank did not offer any comments.
Earlier, on July 2, 2010, RBS had entered into an agreement with HSBC to sell these assets and it was decided that the deal would be completed in the first half of 2011.
But the transaction ran into regulatory hurdles almost as soon as it was announced.
After negotiating for almost two-and-a-half years, RBS and HSBC decided to scrap the deal as the agreement expired on November 30, 2012, without closure of all necessary conditions.
In the past few years, RBS has shrunk both deposits and advances in the country, as it had been preparing to sell part of its India business.