Home / Business and Economy / Yes Bank Fights Supreme Court Order on Rs 8,415 Cr Bonds
Yes Bank Fights Supreme Court Order on Rs 8,415 Cr Bonds
14 Nov
Summary
- Yes Bank seeks Supreme Court review of order upholding AT-1 bond write-off quashing.
- Bombay High Court ruled the bank administrator lacked authority for the write-off.
- AT-1 bonds are riskier perpetual instruments with higher interest rates.
Yes Bank is pursuing a review at the Supreme Court concerning an October 15 order. This order had upheld a Bombay High Court judgment that invalidated the bank's administrator's decision to write off Additional Tier 1 (AT-1) bonds. These bonds, totaling Rs 8,415 crore, were written off in March 2020.
The Bombay High Court had initially quashed this write-off on January 20, 2023. The court found that the administrator lacked the necessary authority to proceed with canceling these AT-1 bonds. The Supreme Court noted that the actions of the RBI, the bank administrator, and Yes Bank regarding the bonds were questionable, potentially exposing investors to undue risk.
AT-1 bonds are perpetual instruments issued to bolster a bank's capital base. They carry higher risks and interest rates compared to traditional bonds and can be canceled by the RBI if a bank faces distress. The Supreme Court emphasized that the purpose of these bonds as a safety net could have been served if all parties had acted appropriately.
