Rs 8,000-crore YES Bank AT1 bond write-off set aside by Bombay HC

Order stayed for six weeks; bank may approach SC

YES Bank
Subrata Panda Mumbai
2 min read Last Updated : Jan 20 2023 | 10:51 PM IST
The Bombay High Court on Friday set aside YES Bank’s erstwhile administrator’s decision to write down additional tier 1 (AT1) bonds worth over Rs 8,000 crore held by bondholders and retail investors.

The court, however, stayed the order for six weeks, which the bank will likely use to approach the Supreme Court on this issue. However, the bondholders, including Axis Trustee Services, in all likelihood will oppose the stay being continued for more than six weeks, said people aware of the development. 

A two-judge Bench of acting Chief Justice S V Gangapurwala and Justice S M Modak upheld the plea filed by Axis Trustee Services and others challenging the administrator’s move to write down the perpetual bonds of the bank. Axis Trustee had moved the Bombay High Court back in 2020 against the administrator’s decision.

Advocates appearing on behalf of the bondholders argued that the write-down of AT1 bonds could only have been done if the bank went into liquidation.

“This will benefit all bondholders, including 63 Moons Technologies, which held bonds worth Rs 300 crore,” 63 Moons said in a statement.

The detailed order was not uploaded on the court website till the time of going to press.

AT1 bonds are perpetual debt instruments that banks use to augment their core equity base and, thus, comply with Basel III norms. These bonds were introduced by the Basel accord after the global financial crisis to protect depositors. The bonds act as buffers for banks in times of stress and are perceived to be safer than equity shares.

The bonds were written off as part of a restructuring plan to rescue YES Bank in March 2020. Equity holders, on the other hand, did not face a similar write-down, but 75 per cent of their shares were subject to a lock-in for three years.

The Reserve Bank of India had put YES Bank under a moratorium in 2020. Consequently, State Bank of India and a few other lenders put together a restructuring package for the bank.

One subscription. Two world-class reads.

Already subscribed? Log in

Subscribe to read the full story →
Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :YES BankBombay High Court

Next Story