Private lender Kotak Mahindra Bank said it planned to sell up to 62 million shares worth as much as Rs 5,320 crore ($819.4 million) at current market valuations, to fund potential acquisitions in the sector among other things.
Country's fourth-biggest private sector lender by assets said its board had approved the sale through a rights issue, public issue or private placement, including a so-called qualified institutions placement. The sale is subject to shareholders' approval.
The fundraising proposal comes amid strong market speculation that Kotak Mahindra is eyeing a takeover of bigger rival Axis Bank. Axis Bank has called the reports "baseless speculation".
Kotak Mahindra said it was seeking to raise the funds to "pursue consolidation opportunities in the Indian banking and financial services space." It also cited other reasons including investment in distressed assets.
At an unrelated news briefing on Wednesday, Kotak Mahindra Chief Executive Uday Kotak said the lender had nothing specific to announce regarding acquisitions but the lender was looking "at all options".
Regulators have long sought more consolidation in the country's crowded banking sector, especially among unprofitable state-run lenders that are saddled with a large number of stressed assets.
Kotak would need the backing of the government to seal any takeover of Axis, which is about 30 percent owned by state-owned insurance companies and a government agency.
Kotak Mahindra bought ING Vysya Bank in 2015 in a $2.4 billion stock-swap deal, the biggest ever in India's banking sector.
The lender has also launched the 811 banking app which is part of the lender's vision to double customer base in 18 months.
Currently, the bank has 8 million customers.
Executive vice chairman and managing director Uday Kotak in a press meet said the 811 is our way of responding to the disruption in banking.
Customers will be able to open an account on the 811 banking app with zero balance, Kotak said. Only Aadhaar and PAN card would be required to open 811 account which would provide access to over 100 features on mobile.
The process of opening the bank account via 811 involves zero cost and cutomers can not only transact but also avail other services like loans and manage investments
The account offers up to 6 per cent interest rate on savings deposits. The new plan '811' is inspired by the date (November 8) on which demonetisation was announced by Prime Minister Narendra Modi, Kotak added.
(With inputs from Reuters)