Supreme Court rules against Yes Bank's write-off of Rs 8,415 crore AT1 bonds
The Supreme Court confirmed the decision of the Bombay High Court regarding Yes Bank's AT1 bonds. This ruling impacts ₹8,415 crore in bonds written off during the bank's 2020 restructuring. The court noted that the administrator lacked the authority to write down these bonds. Bondholders had contested the write-off, citing mis-selling of the securities. Yes Bank is now obligated to repay the…
The Supreme Court has ruled against Yes Bank's write-off of Rs 8,415 crore Additional Tier 1 (AT1) bonds, upholding the Bombay High Court's decision to quash the write-off made during the bank's 2020 restructuring. This decision dealt a significant blow to Yes Bank, which now has Japan's Sumitomo Mitsui Banking Corp (SMBC) as its largest shareholder.
The ruling ends a six-year legal battle that began when the Reserve Bank of India (RBI) intervened to bail out Yes Bank and wrote down its AT1 bonds as part of the restructuring package. The court questioned the RBI's awareness of the consequences of not retaining the write-down clause in the reconstruction scheme. AT1 bonds are considered the riskiest among fixed-income securities, and holders are rewarded with high returns.
The ruling has provided a relief to Yes Bank's AT1 bondholders, who had argued that the bonds were mis-sold and could not be written off after the finalization of the restructuring plan.
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