The proposed assets are expected to have a book size of at least $2.5 billion.
Sources said negotiations are ongoing and there is no guarantee a deal will be finalized.
The portfolio includes mortgages, small business loans and wealth management services.
Last month, the news agency reported that the German lender was in talks to sell its retail and wealth management businesses.
At the time, Emirates NBD was also said to be interested in Deutsche Bank’s Indian assets.
However, Emirates NBD subsequently chose not to submit a bid.
Notably, the UAE lender is now seeking a majority stake in RBL Bank.
Deutsche Bank currently has a branch network across 16 Indian cities, but has re-evaluated its market presence to focus on corporate and investment banking services for multinational companies and key local clients.
A previous attempt in 2018 to sell similar businesses to IndusInd Bank failed due to unmet valuation expectations.
For Kotak Mahindra Bank, the integration of Deutsche Bank’s local assets would add to recent acquisitions, including Standard Chartered’s personal loan portfolio.
Representatives of Deutsche Bank, Kotak Mahindra Bank, Federal Bank, Emirates NBD and RBL Bank did not comment on the discussions.
International financial institutions tend to increase their stakes or assets in the Indian banking sector.
Federal Bank, backed by investment from Blackstone, which became its largest shareholder through a $700 million warrant purchase last year, aims to expand its reach from regional to national operations.
Meanwhile, in September, Sumitomo Mitsui Banking Corporation (SMBC) announced an agreement with CA Basque Investments, a subsidiary of the Carlyle Group, to acquire an additional 4.2% stake in YES Bank.
The move comes after SMBC completed its first purchase of a 20% stake in the Indian private sector lender.
Last month, MUFG Bank, a subsidiary of Japan’s Mitsubishi UFJ Financial, entered into an investment agreement with Indian non-bank lender Shriram Finance.
Under the agreement, MUFG Bank will acquire a 20% stake in Shriram Finance through preferential allotment of shares.
“Kotak and Federal Bank Lead Bids for Deutsche Bank’s Retail Portfolio in India – Report” was originally created and published by Retail Banker International, a brand owned by GlobalData.
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