According to sources close to the development, Kotak Bank, one of the new private sector banks, too had evinced interest in the 88-year old Karnataka Bank, but it is not clear if it has approached the banking regulator with a formal proposal. A possible acquisition of the bank has, in fact, been talked about for almost two years now.

RBI did not respond to a detailed questionnaire mailed to it earlier in the day. To an e-mail sent on Friday evening, an ICICI Bank spokesperson replied on Monday: “ICICI Bank does not comment on market speculations.”

A spokesperson for Kotak Mahindra Group said, “We deny the rumour.” As on September 30, 2012, Kotak Mahindra Investments Ltd held 3.37 per cent in the bank.

When contacted, Karnataka Bank managing director and chief executive officer P Jayarama Bhat said, “This is false news.” The bank’s financials and client base are good. “Last year, we grew 20 per cent. This year, we expect a 25-30 per cent growth,” he said.

The bank’s total business crossed the Rs 50,000-crore mark in 2011-12 and its net profit grew 20.26 per cent to Rs 246.07 crore. Its capital adequacy ratio stood at 12.84 per cent, and its gross NPAs were 3.27 per cent of total advances.

Karnataka Bank’s shares have jumped around 40 per cent in the last month. The stock which was quoting at Rs 86.55 on September 17 this year zoomed to Rs 120.80 on the BSE on Monday.

The rise in prices has been accompanied by higher volumes in the counter. The stock which normally attracts a daily volume of Rs 3-6 crore witnessed a volume of Rs 17.7 crore on October 9, Rs 13.8 crore on October 10, Rs 9.88 crore on October 11, Rs 31.32 crore on October 12 and Rs 11.23 crore on October 15.