Banking and monetary regulator Reserve Bank of India has said no to the idea of merger of private sector lender Ratnakar Bank with micro finance insitution (MFI), BASIX.

According to sources, although no formal application was filed with the apex bank, both entities discussed the issue with senior officials of RBI.

RBI rejected the idea because of the fact that MFIs all over the country have been facing crisis. Had the merger taken place, it would have been the first of its kind in the country where an MFI would have merged a bank to itself.

"There was no formal proposal. It was a discussion on whether a merger could be worked out. This has been put on hold," said a senior BASIX official.