In a bid to diversify their operations, two state-run banks — Union Bank and

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IDBI Bank — are planning to venture into asset management space and have approached the market regulator SEBI for approval.

While IDBI Bank had filed application for licence in January this year, Union Bank of India had submitted its papers with the regulator in February.

All these proposals are at the advance stage of clearance, official sources said.

During the course of the year these banks are expected to get licence and thereafter they can start asset management, sources added.

Meanwhile, the country's third largest private sector lender, Axis Bank has already got the regulator's approval to start asset management business.

The Union Bank of India has set up an asset management firm with KBC Group of Belgium. The joint venture, in which Union Bank owns 51 per cent stake expects to start operations during the current fiscal.

Another public sector lender IDBI Bank has board approval to set up the asset management company either as a wholly-owned subsidiary or as a joint venture.

Currently, there are five mutual funds either fully or partly owned by Indian banks, along with foreign partners.

These include Baroda Pioneer Mutual Fund, Canara Robeco Mutual Fund, ICICI Prudential Mutual Fund, Principal Mutual Fund and SBI Mutual Fund.