Mumbai, Dec. 16 -- A growing disconnect between monetary policy signals and bond market pricing is forcing state-owned borrowers to step back from planned fundraisings.

On Monday, Indian Railway Finance Corp Ltd (IRFC) became the third public sector issuer-after Power Finance Corp (PFC) and Small Industries Development Bank of India (Sidbi)-to withdraw a bond issue within a week.

IRFC withdrew its plans to raise up to Rs.5,000 crore through zero-coupon bonds (ZCBs) as there was limited interest from investors to bid for tight pricing, three merchant bankers told Mint.

According to a bid book accessed by Mint, IRFC withdrew its up-to- Rs.5,000-crore zero-coupon bond maturing in 10 years after it received bids worth over Rs.4,461 crore i...