Yes Bank Ltd. sees no immediate need to raise capital following the Supreme Court's ruling on its Rs 8,415 crore additional tier-1 (AT1) bonds, with Chief Financial Officer Niranjan Banodkar saying the Mumbai-based lender has other options to manage the impact without compromising its growth plans.
“We don't need to solve for capital tomorrow,” Banodkar said during the bank's second-quarter earnings call, referring to its available capital-management options.
Reinstating the AT1 bond principal would reduce Yes Bank's common equity tier-1 (CET1) ratio to around 11.4% on a pro forma basis as of September 30, 2026, including profits. The overall tier-1 capital ratio would remain around 13.7%, the bank said.
The comments came after the Supreme Court, last week, upheld the Bombay High Court's decision setting aside the write-down of Yes Bank's AT1 bonds issued during its 2020 reconstruction. The ruling has prompted the lender to assess the consequences for its capital position, accounting treatment and legal options.
The lender is assessing the accounting treatment of the reinstated bonds and possible legal remedies. It has not finalised the accounting approach or the steps it may take in response to the judgment.
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Capital Options
Yes Bank has several options to manage its capital position, including potential benefits from deferred tax assets and other capital levers, Banodkar said.
The private lender is also evaluating a security-receipts portfolio with a face value of about Rs 1,500 crore and a net asset value of around Rs 2,000 crore. The portfolio has zero carrying value, according to the earnings-call discussion. The figures describe a potential capital lever, not a confirmed transaction or a guaranteed source of funds.
Banodkar said the bank's growth objectives would not be compromised. Under the lender's assumptions, a 15% increase in risk-weighted assets could consume about 30-40 basis points of CET1 capital.
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Accounting Impact
Yes Bank has yet to finalise the accounting treatment for the reinstated AT1 bonds. Banodkar said the pro forma impact had been presented through the profit and loss account for disclosure purposes, but the final accounting approach remained under assessment.
The CFO described the principal reinstatement as a balance-sheet adjustment that would move the amount from reserves to borrowings. He said the reinstatement itself would not require a cash repayment of the principal.
Coupon payments are a separate consideration. Banodkar said the bank was assessing the timing and manner of implementation under the bonds' information memoranda and the Supreme Court judgment. The court directed that annual coupon payments remain unaffected by the appeals and be made in accordance with the information memoranda.
The bank is also discussing possible legal remedies with its counsel. Banodkar said the legal review and assessment of capital actions were separate workstreams.
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