IDBI Bank Ltd. is discussing the potential sale of its stake in stressed assets collector Asset Reconstruction Co. (India) Ltd. to U.S.-based hedge fund Avenue Capital Group LLC, The Economic Times reported Dec. 13, citing people familiar with the matter.

In a same-day filing, the bank reiterated its plan to sell its stake in Asset Reconstruction but stopped short of confirming or denying newspaper's report. The bank added it will make an announcement once an actual sale occurs.

Avenue Capital currently holds a roughly 27% stake in Asset Reconstruction, and the potential acquisition of IDBI Bank's stake will make it the largest shareholder in the company. Such a deal will be subject to the approval of India's central bank.

Sources said the sale is part of IDBI Bank's efforts to monetize its noncore investments.

IDBI Bank CFO Ajay Sharma told the newspaper that the bank has not started talks with potential buyers. Meanwhile, Asset Reconstruction and Avenue Capital did not comment on the matter.