Barclays officials said the bank is in talks with ICICI Bank which holds a 30-per cent stake in Arcil. "We had discussions with ICICI Bank , but the deal is subject to various regulatory approvals," the report quoted Raju Shukla, managing director, investment banking at Barclays, as saying.

Arcil's other shareholders include the State Bank of India, IDBI Bank, Punjab National Bank, Karnataka Bank, Karur Vysya Bank, Citygroup arm Citycorp Finance and a clutch of private investors who hold a minor stake.

Arcil had acquired bad debts worth about Rs21,100 crore ($4.53 billion) from various banks in the financial year ended March 31, 2006. India's banking sector, including co-operative banks and finance companies, is currently nursing bad loans or non-performing assets (NPAs) of about Rs250,000 crore, according to Arcil estimates.

A stake in Arcil, currently the only company in the distressed assets market, would give Barclays, an active fund manager and loan arranger for Indian companies, increased access to the market for offloading bad loans.

Baarclays had managed over a quarter of the $3.5 billion Indian companies raised in 2005 and a stake in Arcil is part of Barclays' expansion plans into potential business areas of the fast-growing economy.

Barclays, with a large international presence in Europe, the US, Africa and Asia, is engaged primarily in banking, investment banking and investment management. In terms of market capitalisation, Barclays is one of the largest financial services companies in the world.

Barclays has been involved in banking for over 300 years and operates in over 60 countries with over 118,000 employees. For the year ended December 31, 2005, the group achieved a pre-tax profit of $9.84 billion, up fifteen per cent on 2004. In 2005 Barclays paid approximately $5.58 billion in taxes. In the six months ended June 31, 2006, Barclays made a pre-tax profit of $6.85 billion, up 37 per cent on the same period in 2005.