Federal Bank Ltd. is looking to acquire Madura Microfinance for about 7.20 billion rupees to 7.50 billion rupees, The Economic Times reported July 3, citing two industry sources.

The lender emerged as a likely buyer among potential suitors as the deal talks progressed. Discussions on share swap and pricing are in progress, one of the sources said.

The acquisition would allow Federal Bank to venture into microfinance and expand its priority sector loans. The bank would also gain a network of more than 250 rural and semi-urban branches in the Indian states of Tamil Nadu, Maharashtra, Karnataka, Kerala, Bihar and Odisha.

The two companies did not respond to the publication's queries on the development, while Federal Bank Executive Director Ganesh Sankaran declined to comment on the matter.

The potential acquisition toes the line with some domestic banks, including HDFC Bank Ltd. and IDFC Bank Ltd., that have entered the microfinancing business.

As of July 3, US$1 was equivalent to 68.56 Indian rupees.