Small Industries Development Bank of India has withdrawn its planned three-year bond issue of Rs 6,000 crore, bankers told Reuters, after hardening domestic bond yields made the pricing unattractive for the lender.

The withdrawal comes amid sharp volatility in India's debt market. The Reserve Bank of India shifted its policy stance from accommodative to neutral, signalling an end to expected rate cuts and pushing yields higher across tenors, especially on shorter-dated paper.

SIDBI is not alone in stepping back. Several issuers, including state-owned entities, have deferred or cancelled planned bond sales in recent weeks, according to market reports. New issuances have become highly selective, with investors favouring longer-term bonds from funds with money to deploy, while shorter tenors face sharper resistance.

The move signals tighter conditions in the corporate debt market. Market participants say issuers may wait for calmer yields before returning, while traders watch whether a cut in government bond supply offers some relief.