Syndicate Bank [Get Quote], Manipal-headquartered public sector lender, has put on hold its plan to raise Rs 800 crore (Rs 8 billion) through a qualified institutional placement and medium-term note, following unfavourable market conditions and the global financial crisis.

The bank, however, plans to raise around Rs 500-600 crore (Rs 5 to 6 billion) to augment its tier-II capital in the domestic market.

"Considering the volatility in the markets, we have decided to put on hold the proposed QIP issue for some time. However, we are exploring other options like raising tier-II capital or an innovative perpetual debt instrument," Syndicate Bank Chairman and Managing Director George Joseph said.

Although the bank is yet to get an approval from the finance ministry for its proposed QIP issue, he said, "We are not pursuing with the ministry for an early approval as it would not be favourable to go to the market at this moment."

While the timing of raising funds through a hybrid instrument is yet to be decided, the bank aims to go in for fund-raising some time during the fourth quarter of the current financial year, Joseph told Business Standard.

Union Bank of India [Get Quote], which had planned a rights issue to bolster its capital base, had deferred its plans even before the US financial meltdown started.

UTI AMC too has postponed its IPO plans and there have been no statements on its proposed private placement.

Syndicate Bank, the seventh largest public sector lender, had planned to raise about Rs 800 crore (Rs 8 billion) through a QIP issue by placing 80 million equity shares with qualified institutional buyers.

The placement would bring down the government stake in the bank's equity to 57 per cent from 66.47 per cent.

In addition, the bank also had the option of tapping the medium-term note of up to $155 million. However, Joseph said, "Volatility in the global financial markets is not conducive for an MTN issue as the pricing will be a big issue. So we have put this option too on hold."