Kotak Mahindra Bank is holding negotiations with Citibank to acquire its consumer finance arm CitiFinancial Consumer Finance India, according to the Mint.

CitiFinancial gives home and personal loans to retail borrowers in the low income segment in India. Kotak Mahindra Bank is conducting due diligence on CitiFinancial’s assets, according to the source.

Since 2007, CitiFinancial has been reeling under bad loans and losses, which were largely accrued because of higher delinquencies in unsecured personal loans. CitiFinancial reported a net loss of INR7.29bn in fiscal 2009 compared to a profit of INR190m in the previous year.

An executive of Kotak Mahindra Bank told Mint that talks between the two parties were ‘currently at a very, very preliminary stage’ and ‘general’ in nature.

As a result of the global financial crisis, Citigroup restructured its business in 2009 to transfer non-core businesses such as its retail brokerage, consumer finance and asset management to Citi Holdings. CitiFinancial is part of Citi Holdings.