From The Economic Times · Indu Bhan · · 1m
Supreme Court Blocks Yes Bank's Rs 8,415 Cr AT1 Bond Write-Off
Supreme Court rules against Yes Bank's Rs 8,415 crore AT1 bond write-off, forcing repayment to bondholders.
In brief
Supreme Court rules against Yes Bank's Rs 8,415 crore AT1 bond write-off, forcing repayment to bondholders. Supreme Court voids Yes Bank's write-off of Rs 8,415 crore AT1 bonds, requiring repayment to bondholders. Originally reported by The Economic Times.
Supreme Court Ruling
Supreme Court upheld Bombay High Court's decision quashing Yes Bank's write-off of Rs 8,415 crore AT1 bonds during 2020 restructuring.
“Was the RBI, the regulator, not aware of the consequences of not retaining the write-down clause in the reconstruction scheme?”
AT1 Bonds Explained
AT1 bonds are riskiest fixed-income securities with high returns, converted to equity or written off when bank capital erodes.
RBI's 2020 Bailout
RBI orchestrated largest Indian bank bailout in March 2020 after Yes Bank teetered amid fraud charges.
Court's Legal Reasoning
Court held administrator lacked power to write down bonds not part of restructuring scheme, RBI unaware of consequences.
“It is a settled legal principle that a power not specifically conferred cannot be implicitly vested through a general, omnibus savings clause.”
Bondholders' Relief
Yes Bank's AT-1 bondholders now liable for Rs 8,415 crore plus interest after ruling.
Market Reaction
Yes Bank shares fell 14.53% to ₹18.12 after ruling, while broader market surged 2%.
In short
Supreme Court voids Yes Bank's write-off of Rs 8,415 crore AT1 bonds, requiring repayment to bondholders.
