Yes Bank moves SC seeking review of order on writing off of Rs 8,415 cr AT-1 bonds

Yes Bank has petitioned the Supreme Court to review its decision upholding a Bombay High Court ruling that voided the bank's decision to write off Additional Tier 1 bonds totaling Rs 8,415 crore in March 2020. The bonds, which are riskier than traditional bonds with higher interest rates, are used to bolster a bank's capital base and can be cancelled by the RBI if a bank is in financial trouble.

The Supreme Court found the involvement of the RBI, Yes Bank administrator, and Yes Bank in the bond write-off questionable, as it put investors at undue risk. The court stated that the purpose of AT-1 bonds is to act as a safety net for a bank, and in this case, its absence would have prevented Yes Bank's collapse. The Supreme Court also noted that material irregularities in Yes Bank's functioning were observed prior to the bond write-off, leading to criminal proceedings against Yes Bank personnel.

However, the court emphasized that investors should not bear the brunt of administrative errors. The High Court had previously quashed the administrator's decision to write off the bonds, but left its decision on hold for potential appeals by the RBI and Yes Bank. The High Court ruled that the final reconstruction scheme of Yes Bank, issued by the RBI, did not include provisions for writing down AT-1 bonds.