Bank of Baroda (BoB) will take over specific assets and liabilities of Mumbai-based Memon Cooperative Bank Ltd, ahead of a full acquisition of the private bank.
BoB has received approval from the government and the Reserve Bank of India for the purpose.
The bank will formulate a scheme for the takeover, which will be subject to further approvals from the appropriate authorities, BoB said in a filing with the Bombay Stock Exchange (BSE).
State-run Bank of Baroda had, last week, announced plans to raise up to Rs4,000-crore capital in the current fiscal.
"We have the scope to raise between Rs3,000 crore-Rs4,000 crore in the current fiscal.
The funds would be raised as Tier-I and Tier-II capital," BoB's chairman and managing director M D Mallya, told reporters on the sidelines of a banking conference in Mumbai.