AT-1 case: Yes Bank does not expect material financial impact from Supreme Court ruling

Mumbai: Yes Bank said the Supreme Court has concluded hearing arguments in the case related to the write-down of its Additional Tier-1 (AT-1) bonds and has reserved its order for judgment.

If the court's final verdict results in any financial liability, the impact will be recognised in future reporting periods, the lender said. But it does not anticipate any material financial impact since the write-down was conducted in compliance with applicable terms and regulations, the bank said in the footnotes to the financial statements released on Saturday.

The case traces its origins to one of the most dramatic bank failures in Indian financial history. On March 5, 2020, the central government imposed a moratorium on Yes Bank, as the lender teetered on the edge of collapse. The Reserve Bank of India simultaneously superseded the bank's board and appointed an administrator to run its affairs. Within days, the government pushed through the Yes Bank Reconstruction Scheme, which reconstituted the bank and paved the way for a new board.

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The administrator, acting on behalf of the bank, wrote down two tranches of AT-1 bonds citing contractual covenants and RBI guidelines. The value of the bonds, totalling ₹8,415 crore, was reduced to zero, wiping out the investment for those who had bought them as relatively safe, yield-bearing instruments.

The write-down triggered a wave of legal challenges. Bondholders filed writ petitions, civil suits and criminal and consumer complaints across courts in India starting 2020. While most of these proceedings remain pending, a batch of writ petitions before the Bombay High Court and one before the Madras High Court reached more advanced stages of adjudication.

The Bombay High Court ruled against Yes Bank, prompting the bank, RBI and the government to separately file special leave petitions before the Supreme Court challenging that judgment. Final arguments before the Supreme Court concluded on February 26.