Royal Bank of Scotland (RBS) that leads its Indian operation under a successful association bid with ABN AMRO, is planning to sell its retail and SME banking business in India. As a part of strategy to focus on key markets, the bank will also sell about 75% of its branches in the country.

However the bank needs RBI's approval for the same. "The deal can occur in broadly two ways - it could be an asset and liability sale, or it could be a sale with the blessing of RBI, of potentially the licences. We will retain licences, commensurate with the business that we are looking to do," said Phillip Hampton, the newly-appointed chairman of RBS group.

The bank intends to retain a few branches and around 8,000 employees in the country after the sale. Presently the bank has around 31 branches in 21 cities across India and out of these around eight branches will be retained by the bank in the key cities.

There are expectations that a host of foreign banks including ANZ, StanChart, HSBC and DBS will come forward to buy RBS's operations. Even some of the Indian private sector banks like Kotak Mahindra Bank and IndusInd Bank are expected to be amongst the prospective bidders.

The business that RBS plan to retain in India are its global banking and markets (GBM), global transaction services (GTS) and private banking. The GBM business of the bank comprise of corporate, investment bank and treasury where as the GTS business includes cash management, trade finance and other transaction services.

Last month, RBS declared that its retail and commercial business outside UK, Ireland and North America will come under the non-core business. The bank's Chairman said a range of options could take over the deal. He informed that the retail business could be taken over by a foreign bank that is operating in India and already has a retail and SME business in the country. However it could also be taken by an international bank looking forward to develop in others areas.

Presently RBS has six core markets including India, China, HongKong, Singapore, Japan and Australia.

Further RBS said that if RBI allows them to sell some of its branches, it would be able to raise around $500 million as compared to around $100 million if the branches are not sold.