The Supreme Court on Thursday upheld the Bombay High Court’s judgment that quashed Yes Bank’s ₹8,415 crore additional tier-1 (AT-1) bond write-off. The bench of Justices Dipankar Datta and Augustine George Masih dismissed the appeals, ruling in favor of the bondholders and rejecting Yes Bank’s attempt to write off the bonds without explicit authorization. The decision was announced after the court reserved judgment in May this year, marking a significant legal development for the bank and bondholders.
The Supreme Court examined whether Yes Bank’s administrator had the authority to write off the AT-1 bonds without a specific provision in the bank’s reconstruction scheme. The court also reviewed compliance with the Reserve Bank of India’s (RBI) master circular and the terms of the bonds. The bench clarified that the annual coupon payments on the bonds would continue unaffected by the ruling and must be paid according to the information memorandum. The full written judgment was awaited to understand the broader impact on banking and bond rescue plans.
This ruling has important implications for the banking sector and the use of AT-1 bonds in financial restructuring. AT-1 bonds are a form of contingent convertible bonds that banks use to shore up capital, often written off during crises to absorb losses. The court’s decision reinforces bondholders’ rights and limits banks’ ability to unilaterally write off such bonds without clear regulatory or contractual authority. This case is closely watched as it could influence future bank rescue frameworks and investor confidence in similar instruments.
Yes Bank has not responded to queries regarding the judgment. The court’s full written order is expected to provide detailed guidance on the legal framework governing AT-1 bonds. The ruling follows the Supreme Court’s reserved judgment on 20 May and settles a key dispute involving ₹8,415 crore in bonds issued by Yes Bank, one of India’s prominent private lenders.