By Michelle Price and Sumeet Chatterjee
HONG KONG/MUMBAI (Reuters) - Singapore's biggest lender DBS Group Holdings
Financial details of the transaction were not immediately clear, though one of the people said the deal could fetch about $200 million.
An Indian private sector lender is also likely to bid for the unit, another source directly involved in the process said, declining to give details. The sources declined to be named as the talks are not yet public.
RBS, 73 percent owned by the British government, said in February it would shrink its banking operations, pulling out of about 25 countries including India to help it refocus on lending in Britain.
The India business of RBS is comprised of corporate and institutional banking, trade finance and cash management.
The planned sell-off of RBS's India assets will not involve its back-office outsourcing business in India, said the sources.
Last year, RBS's net balance sheet exposure in India fell by 1.7 billion pounds ($2.6 billion) to 2 billion pounds due to a drop in corporate lending, particularly in the oil and gas and mining and metals sectors, according to its annual report.
RBS was rescued by a 46 billion pound British government bailout during the 2007/09 financial crisis, before which it was briefly among the world's biggest banks by assets after M&A-backed expansion and aggressive lending. It has faced a long struggle back to health involving slashing its loan book and boosting capital ratios.
Chief Executive Ross McEwan has narrowed the Edinburgh-based bank's focus to UK retail and commercial banking and it has slashed the size of its investment bank and sold businesses in the United States and around the world.
As part of its strategy to pull back from some foreign markets, RBS has been paring its presence in India in the recent past and last month it announced the sale of its Indian private banking unit.
In 2013, Ratnakar Bank Ltd, a small-sized Indian private sector lender whose top ranks are filled executives from Wall Street banks, acquired RBS's Indian credit cards, mortgage and commercial banking portfolios.
The deal with Ratnakar Bank came after RBS's divestment of its Indian retail and commercial banking operations to HSBC Holdings Plc
The takeover of RBS's corporate banking business in India, if completed, would help the local units of foreign lenders DBS or FirstRand compete better with bigger Indian rivals, most of whom are state-owned, banking sector experts said.
DBS, FirstRand and RBS declined to comment.
($1 = 0.6497 pounds)
(Reporting by Michelle Price in Hong Kong and Sumeet Chatterjee in Mumbai; Additional reporting by Matt Scuffham in London; Editing by David Holmes and David Evans)
