UPDATE 1-StanChart in talks on RBS China, India units -source

* StanChart in talks to buy RBS's China, India assets

* Move comes as RBS tries to sell some Asia banking ops (Add comments, background)

HONG KONG, July 1 (Reuters) - Standard Chartered <2888.HK> is in talks to purchase assets in China and India owned by the Royal Bank of Scotland (RBS) , a source with direct knowledge of the matter said on Wednesday.

StanChart's pursuit of the units comes as RBS tries to wrap up the sale of its retail and commercial banking divisions in Asia.

The initial plan was to sell the entire group to one buyer for at least $2 billion. But that effort failed, and the process is now focused on selling various parts to separate buyers, sources involved with the process say.

ANZ , Australia's fourth-largest lender, said in May that it had submitted a non-binding bid for the RBS assets and had raised A$2.5 billion ($2 billion) in a share sale to both fund the acquisition and strengthen its balance sheet.

ANZ is in talks to buy RBS units in Hong Kong, Taiwan, Singapore, Vietnam and Indonesia, according to a Bloomberg report. The report said StanChart was eyeing the RBS Malaysian assets too.

Edinburgh-based RBS is refocusing on its core businesses and plans to exit or shrink in up to 36 of the countries where it operates. The bailed-out bank, now 70 percent owned by the UK government, is selling its commercial and retail banking units in Asia, and keeping its investment banking business.

"We are well advanced with the sale process, however due to regulatory constraints and the confidentiality of the process we will not be commenting on any individual bidders or elements of the transaction process until its completion," RBS spokeswoman Yuk Min Hui said in an emailed statement on Wednesday.

The Asian assets for sale include 28 branches in India, where RBS has more than 1.3 million customers; 20 in Indonesia, where it has the largest foreign-owned bank network; and 17 in Taiwan, serving over 1 million customers. RBS has 13 branches in China.

RBS is likely to fetch close to $1 billion from the sale of its Asian assets than the $2 billion that had earlier been expected, Reuters has reported.

The three main contenders for the Asia assets have been ANZ, HSBC Holdings and Standard Chartered. It was not clear on Wednesday where HSBC stood in the process. The bank could not be reached immediately for comment.

"We have already earlier this year said publicly that we were involved in that process, but the outcome at this stage is unknown," ANZ spokesman Kevin Foley said on Wednesday, adding that ANZ is still in talks with RBS. (Reporting by Michael Flaherty; Editing by Muralikumar Anantharaman)