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Yes Bank shares plunge after Supreme Court upholds AT-1 bond ruling
The Supreme Court of India has upheld a Bombay High Court ruling that quashed the 2020 decision to write off ₹8,415 crore of Yes Bank's Additional Tier-1 (AT-1) bonds. The Court ruled that the bank's administrator lacked the authority to cancel these bonds during the bank's restructuring, as the plan contained no explicit provision for such a write-off.
In its judgment, the Supreme Court strongly criticized the Reserve Bank of India (RBI), describing the regulator as a “mere bystander” while Yes Bank's financial condition deteriorated. The Court also noted that Yes Bank had sold high-risk AT-1 bonds to retail investors in violation of RBI guidelines. The ruling dismissed appeals from the central government, the RBI, and Yes Bank.
Following the decision, Yes Bank's shares fell by more than 17 percent in two trading days. The bank indicated that the reinstatement of the bonds could reduce its core capital ratio by approximately 250 basis points, though it expects its Tier-1 capital ratio to remain above regulatory minimums. S&P Global Ratings noted that the decision is not expected to have an immediate impact on the bank's credit rating.
Entities
Bombay High Court · Central Bank of India · Reserve Bank of India · S&P Global Ratings · Supreme Court of India · Yes Bank
Claims
What the coverage asserts, and how many sources carry each claim.
- [● 2 SOURCES] The Court ruled that the bank administrator lacked the authority to write off the bonds under the restructuring plan. www.swatantraprabhat.com · www.tv9hindi.com
- [● 2 SOURCES] The Supreme Court upheld a Bombay High Court decision that quashed the 2020 write-down of ₹8,415 crore in AT-1 bonds. www.barandbench.com · www.tv9hindi.com
- [○ 1 SOURCE] The Court described the handling of the bond matter by the RBI, the bank, and the administrator as questionable. www.barandbench.com
- [○ 1 SOURCE] Yes Bank's shares experienced a decline of over 17 percent within two trading days following the ruling. www.swatantraprabhat.com
- [○ 1 SOURCE] S&P Global Ratings stated that the court decision is not expected to immediately affect the bank's credit rating. www.swatantraprabhat.com
- [○ 1 SOURCE] The Supreme Court criticized the Reserve Bank of India for failing to intervene while Yes Bank's financial position deteriorated. www.barandbench.com
- [○ 1 SOURCE] The Court noted that Yes Bank sold high-risk AT-1 bonds to retail investors in violation of RBI guidelines. www.barandbench.com
- [○ 1 SOURCE] The reinstatement of the ₹8,415 crore in AT-1 bonds could reduce Yes Bank's core capital ratio by approximately 250 basis points. www.swatantraprabhat.com