From The Economic Times · Indu Bhan · · 1m 50s
Supreme Court blocks Yes Bank's Rs 8,415 crore bond write-off
Supreme Court rules Yes Bank cannot write off Rs 8,415 crore AT1 bonds.
In brief
Supreme Court rules Yes Bank cannot write off Rs 8,415 crore AT1 bonds. Supreme Court voids Yes Bank's write-off of Rs 8,415 crore AT1 bonds, requiring the bank to pay bondholders. Originally reported by The Economic Times.
Supreme Court upholds HC ruling
Supreme Court Thursday upheld Bombay High Court's decision quashing Yes Bank's write-off of Rs 8,415 crore AT1 bonds during 2020 restructuring.
Yes Bank shares fall 14.53%
Yes Bank shares tumbled 14.53% Thursday to ₹18.12 apiece after the ruling, while the broader market surged nearly 2%.
Kotak MF suspends subscriptions
Kotak Mahindra Asset Management Company suspended subscriptions for two debt funds holding Yes Bank AT1 bonds to protect investors.
AT1 bonds are high-risk securities
AT1 bonds are the riskiest fixed-income securities with high returns but require conversion to equity or write-off during bank distress.
RBI's role questioned
The court questioned whether the RBI was aware of the consequences of not retaining the write-down clause in the reconstruction scheme.
SC rules administrator lacked power
The Supreme Court held the administrator lacked powers to write down AT1 bonds not part of the restructuring scheme.
Bondholders get relief
Yes Bank's AT-1 bondholders now receive Rs 8,415 crore plus interest after the court voided the write-off.
Yes Bank violated RBI rules
The court found Yes Bank actively offered high-risk AT1 bonds to individual investors, violating RBI's Master Circular.
RBI lapses noted
The court pointed to material irregularities in Yes Bank's functioning and criminal prosecutions against its personnel.
Central government decision reversed
The court said the central government's decision to delete the write-down clause was dismantled by the administrator.
Investor sentiment impacted
The ruling may dent investor sentiment as AT1 bonds feature loss absorption in financial distress.
The one thing
Supreme Court voids Yes Bank's write-off of Rs 8,415 crore AT1 bonds, requiring the bank to pay bondholders.
