India’s Yes Bank (NSE: YESBANK), 24.9% owned by Japan’s Sumitomo Mitsui Banking Corporation, has withdrawn its plan to raise around $500mn through three-year US dollar bonds after investors demanded higher yields amid a rush of Indian lenders seeking to tap the dollar debt market, three merchant bankers told Reuters.

Yes Bank had appointed bankers last week to arrange the proposed bond issue.

Investors were seeking yields 30-40 basis points higher than normal after the Reserve Bank of India brought forward the closure of its dollar deposit window, one of the bankers told Reuters.

Indian banks have been rushing to complete dollar bond sales, with much of the proceeds expected to be used to provide leverage to customers depositing funds under the RBI’s discounted dollar deposit scheme. The scheme closes on August 31.

CreditSights had estimated fair value for Yes Bank’s proposed notes at a spread of 170-180 basis points over US Treasuries, implying a yield of around 6.035%-6.135%.

The research firm said that, among Indian private-sector banks, Axis Bank (NSE: AXISBANK) was the closest comparable and estimated fair value for Yes Bank at a spread of 75 basis points.

However, investors were demanding a spread of around 200 basis points over US Treasuries, according to the bankers.

Yes Bank last accessed the dollar debt market in 2018, raising $600mn through five-year securities. The lender also wrote off more than INR84bn ($880.32mn) of perpetual bonds in the domestic market, a move that dented investor confidence.

Two other mid-sized private-sector lenders, Federal Bank (NSE: FEDERALBNK) and RBL Bank (NSE: RBLBANK), have also shelved planned dollar bond issuances, the bankers said.

Both banks had been considering benchmark $500mn debt issues.

Banks face limited time to complete the disclosures required for public bond offerings, while private placements have become increasingly expensive, another banker said. As a result, lenders are opting to defer their planned borrowings for now.