IndusInd Bank on Monday saw a 4.2% jump in its shares after it denied the reports concerning a merger proposal by Kotak Mahindra. 

In a statement on late Sunday, IndusInd Bank said it “denies the rumour in certain media reports concerning a merger proposal, and considers it to be malicious, untrue and baseless.”

Earlier in day, Bloomberg reported that Kotak Mahindra Bank is planning to take over smaller rival IndusInd Bank that would create India’s eighth-largest financial firm by assets.

According to Bloomberg, Uday Kotak, founder and chief executive officer of Kotak Mahindra and the UK-based Hinduja family have held initial talks so that the founders of IndusInd Bank could retain a stake in the lender after a deal.

If the deal goes through, Kotak Mahindra would become one of India’s leading private banks, boosting its assets by about 83%. It will also give a new life to IndusInd Bank, which has seen its market value drop by 60%. 

Kotak Mahindra’s 2.7 trillion rupee market capitalization makes it India’s third-largest lender by value.

Meanwhile, IndusInd’s shares have fallen worsening its asset quality and erosion of low-cost deposits.