The government-run bank, which along with its associates controls a quarter of Indian bank loans and deposits, will join a clutch of foreign lenders interested in funding the deal that aims to create the world's third-biggest wireless group with more than 200 million subscribers and combined revenue of $20 billion.

"Bharti is our customer. We looked at the transaction and thought we could be part of it too," one source, who has direct knowledge of the transaction, said.

State Bank has offered the loan for between 3 and 5 years, said the two sources, who cannot be named as they were not authorised to speak to the media.

"We have no further comment to offer at the moment," said a spokesman for Bharti, referring to its statement in May announcing the leading Indian mobile operator had revived exclusive talks with MTN for a merger.

State Bank officials declined comment.

Under a complex deal structure announced in May, Bharti would end up with 49 per cent in MTN and the South African firm and its shareholders would own a total 36 per cent of Bharti. The exclusive merger talks could run till the end of July.

Brokerages have estimated a net cash outflow of about $4 billion from Bharti in the deal.

Bharti is yet to talk about how it will fund the deal, but has said the funding requirements would not be "onerous".

Sources have said Standard Chartered, advisor to Bharti in the transaction, has agreed to underwrite $1 billion and help in raising the balance $3 billion required.

Debt funding is seen as the best option for Bharti, which has recently become cash-flow positive, and dividends from MTN could help it service the loan, analysts said.

Also just $629 million in net debt at the end of March, representing a net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) of 0.25, makes it easier for the firm to take on more debt, they said.

US banks, which have funded most of India's overseas acquisitions, are wearily treading around Bharti deal as more than a tenth of MTN's revenues come from Iran, Sudan and Syria -- states where the United States sets tough restrictions on US firms from dealing.