Vijaya Bank has kept its options open for acquiring Bank of Punjab and said it was not averse to merger with a public sector bank if the government allows such a proposal.

"There has been an internal assessment for acquiring Bank of Punjab. The price seems to be high. But we are not ruling it out," Vijaya Bank chairman, M S Kapur, said.

He said the government has no objection if a PSU bank acquires a private bank, if it results in inorganic growth.

The Bangalore-based bank intends to acquire a bank based in the northern region as part of plans to expand its operations.

Vijaya Bank has 843 branches, most of which are concentrated in the southern part of the country.

The new generation Bank of Punjab on the other hand has a major presence in the northern region.

Promoters and close associates hold 36.31 per cent in Bank of Punjab while the remaining 63.39 per cent is held by public, financial institutions, mutual funds, corporates and NRIs.

Set up in 1995, Punjab bank is one of the fastest growing banks and aims to achieve Rs 16,000 crore (Rs 160 billion) business and Rs 10,000 crore (Rs 100 billion) in deposits by 2005.

Vijaya Bank on the other hand has a business of over Rs 25,000 crore (Rs 250 billion). The government holds 70 per cent stake in the bank.

Kapur said the bank is also not averse to mergers or acquisition of a PSU bank in the north. "But this has to be decided by the government," he said.

Passage of relevant banking legislations was necessary for speeding up mergers and acquisitions, he added.