Sources said that bank was making an inital public offering (IPO) of 10 crore shares at a premium of Rs 12 to Rs 15. "The bank was to raise Rs 120-150 crore through the issue. Presentations were made a week back by the merchant bankers. But now they do not seem to be interested in pushing the issue through," a source who attended the presentation by merchant bankers said.

If Andhra Bank does not submit its draft prospectus to the capital market watchdog Securities & Exchange Board of India (Sebi) by September 30, it will be required to wait till its half yearly results are finalised before filing the prospectus.

According sources, the Andhra Bank management is planning to wait till the market sentiment improves substantially so that it can command ahigher premium. Another south-based bank -- Syndicate Bank -- has already firmed up plans to hit the market with a par issue which will mop up Rs 125 crore. A new generation private sector bank, Centurion Bank, is also planning to enter the market with a par issue.

"Retail investors are generally bearish about the banking sector. over the last one year most of the bank issues that have hit the market have been commanded a premium of Rs 5 to Rs 8. UTI Bank, IDBI Bank, South Indian Bank -- all tapped the equity market to raise capital at premiums between Rs 5-8. The pricing is justified," a source close to the issue said.

Syndicate Bank's public issue -- priced at Rs 10 and lead managed by SBI Capital Markets and three others -- is scheduled to open on October 25 and close on November 5. According to the draft prospectus filed with Sebi, of the total 12.5 crore shares on offer, 11.5 crore shares are for the public, the balance being offered the employees and the directors of the bank. The issue is notunderwritten.