The Federal Bank Limited has shelved its planned US dollar bond issuance for now as investors demanded higher yields due to an oversupply of bonds from India, with the bank awaiting a more opportune time to raise funds.

Federal Bank Limited clarified in an exchange filing that it is not considering any transaction requiring disclosure regarding reports of acquiring a controlling stake in Jana Small Finance Bank Limited, stating it evaluates opportunities in the ordinary course and has no material event to disclose, after its shares fell as much as 4% to Rs342.05.

The Federal Bank Limited is reportedly in advanced stages of a deal to acquire a controlling stake in Jana Small Finance Bank Limited, according to a CNBC-TV18 report on August 25. The report said Jana Small Finance Bank's promoter is likely to sell its entire 16.9% stake, after which The Federal Bank Limited is expected to launch an open offer for remaining shareholders. The Federal Bank Limited's shares fell 4% on the news.

Federal Bank Limited saw Blackstone purchase a 9.9% stake worth $705 million, with Nomura acting as financial advisor on the buyside transaction, according to Nomura's India investment banking head Amit Thawani.

The Federal Bank Limited said its board approved raising up to $500 million through issuance of foreign currency-denominated bonds via its IFSC Banking Unit in GIFT City.

Federal Bank Limited received a Buy rating from Goldman Sachs with a target price of Rs 425, implying 19% upside, as part of coverage on 14 Indian banks. Goldman Sachs named Federal Bank among its preferred picks.