(InfoWorld) - Oracle declined to comment on a report Wednesday that it is in talks to buy a controlling stake in Indian banking software vendor i-flex Solutions for $650 million.

The U.S. software maker is in talks with Citigroup's private equity division over the acquisition, according to Wednesday's Financial Times newspaper, which cited unnamed people close to the situation. Citigroup's equity division owns a 43.1 percent stake in i-flex.

Citigroup has been trying to sell its stake in the Indian company for some time and Oracle "appears to be the most determined buyer," a source told the Financial Times. No deal has been signed yet and the talks could still collapse, the source added. Citigroup also wants to sell its 44 percent stake in India's Polaris Software, the newspaper reported.

A spokeswoman for Citigroup declined to comment on what she called "rumors and speculation." Oracle also declined to comment, and a representative from i-flex in India called the report "market speculation."

I-flex sells a broad suite of software for retail, corporate and investment banking. Based in Mumbai, it has 540 customers worldwide and 4,700 employees, according to its Web site.

The deal would be a significant one for Oracle, which views the financial sector as a vertical market where it hopes build a strong business, along with the telecommunications and retail sectors, said U.K. research company Ovum.

"These sectors are some of the most information-intensive, and typically have amongst the highest IT spend. Without such vertical capability, Oracle will not be able to grow its applications business as well as it should," Ovum said.

The acquisition would fit with Oracle's recent focus on vertical, industry-specific applications, as opposed to general purpose business software, the research company said. Customizing its existing software for specific industries would take too long, Ovum said.

Oracle has been on an acquisition spree as it tries to strengthen its position against business applications market leader SAP. In addition to its $10.3 billion purchase of PeopleSoft late last year, Oracle has recently acquired retail applications vendors Retek and ProfitLogic, as well as database caching vendor TimesTen.

It already has significant operations in India, and recently said it would buy two PeopleSoft development centers in Bangalore.

Together, the acquisitions present integration challenges for Oracle.

"We do not see basic structural integration as a major problem," Ovum said. "The difficulty will come from the softer elements of cultural integration and change management, and the longer-term product integration that will follow in subsequent years."

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