- Yes Bank is reviewing the Supreme Court's judgment on AT-1 bond write-downs worth Rs 8,415 crore
- The court upheld the Bombay High Court's order dismissing appeals by Yes Bank, RBI, and the government
- The ruling reverses the March 2020 write-down of AT-1 bonds during Yes Bank's rescue by SBI-led consortium
Yes Bank on Friday said it is examining the Supreme Court's October 15, 2026 judgment in detail and evaluating all available legal options and suitable actions going forward after the court set aside the write-down of its Additional Tier-1 (AT-1) bonds worth Rs 8,415 crore undertaken in March 2020.
In an exchange filing, the lender said it respects the judgment, which upheld the Bombay High Court's January 20, 2023 order and dismissed appeals filed by the bank, the Reserve Bank of India (RBI) and the Union government.
The bank also said it has access to appropriate capital-management levers and retains the flexibility to undertake additional capital actions, as considered appropriate, to pursue its growth objectives.
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Yes Bank added that it remains focused on maintaining the strength of its franchise and providing customers with consistent service and support across their banking requirements.
What Had Happened In The Previous Session?
The Supreme Court on Thursday upheld the Bombay High Court's January 2023 judgment quashing the write-down and dismissed appeals filed by Yes Bank, the Reserve Bank of India (RBI) and the Centre.
The ruling provides relief to institutional and retail investors whose AT-1 bond holdings were written down to zero during the bank's rescue in March 2020.
What Is The Yes Bank AT-1 Bond Case?
The dispute dates back to March 2020, when Yes Bank was facing a severe financial crisis marked by rising bad loans and weakening depositor confidence. The RBI superseded the bank's board and imposed a moratorium, following which the government approved a reconstruction scheme backed by a capital infusion from an SBI-led consortium.
As part of the rescue, the bank's administrator wrote down AT-1 bonds worth Rs 8,415 crore to zero. AT-1 bonds are perpetual debt instruments that form part of a bank's regulatory capital and can absorb losses under specified contractual and regulatory conditions.
Why Was The Write-Down Challenged?
The central issue was whether the write-down was authorised under the reconstruction scheme, the RBI's regulatory framework and the contractual terms governing the bonds.
Bondholders argued that the final reconstruction scheme did not include a provision for writing down or converting the AT-1 bonds, despite such provisions having been considered in the draft. They contended that the administrator could not unilaterally extinguish their investments after the scheme came into force.
The Centre, Yes Bank and the RBI had argued that the write-down was consistent with the applicable regulatory framework and contractual terms. The government also maintained that writing down the bonds before the SBI-led consortium's capital infusion could have jeopardised the bank's rescue.
During the hearing, the Supreme Court examined when the reconstruction could be considered legally complete and whether the non-viability trigger for a write-down could operate independently or had to be linked to the reconstruction process under Section 45 of the Banking Regulation Act.
What Could The Verdict Mean For AT-1 Bondholders?
The government had told the court that nearly Rs 1 lakh crore of AT-1 bonds were outstanding across banks and warned that an adverse ruling could affect investor confidence in these instruments and complicate future bank rescues.
Bondholders, however, maintained that the matter concerned whether the law and due process had been followed in this specific case. The Supreme Court's decision brings the interpretation of the reconstruction scheme and the regulatory framework governing the write-down into focus.
Yes Bank had previously said that any financial liability arising from the court's final verdict would be recognised in the relevant future reporting period, while indicating that it did not anticipate a material financial impact.
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