Yes Bank weighs legal options after Supreme Court voids ₹8,415 crore bond write-off

The Supreme Court of India on Thursday, October 15, upheld a Bombay High Court ruling that set aside Yes Bank's 2020 write-down of Additional Tier-1 (AT-1) bonds worth ₹8,415 crore. On Friday the bank said it is examining the judgment and all available legal options.

The ruling

The Hindu reports that the Supreme Court dismissed appeals filed by Yes Bank, the Reserve Bank of India (RBI) and the Union government against the Bombay High Court's January 20, 2023 judgment. The bonds were written down in March 2020 after the government and the RBI stepped in to rescue the bank. Bondholders challenged the decision, and the High Court set aside the order of the bank's administrator.

The Indian Express reports that the High Court had held that the reconstruction scheme sanctioned by the Central government contained no provision for writing down AT-1 bonds, and that the administrator could not have taken the decision after the bank was reconstituted under the scheme. A lawyer for the bondholders, Srijan Sinha of Edictum Law & Co., told Reuters, as carried by The Hindu BusinessLine, that the Supreme Court held the write-off illegal and arbitrary because it went against the Final Reconstruction Scheme gazetted by the Union of India.

Vivek Ramji Iyer of Grant Thornton told Reuters the decision appears to rest on a technicality rather than the underlying terms of the product, and said it creates regulatory uncertainty.

The bank's response

In a stock exchange filing on Friday, October 16, Yes Bank said it respects the judgment and is evaluating all available legal options and suitable steps, The Hindu reports. The bank said it has access to capital-management levers and keeps the flexibility to take additional capital actions.

The bank said the pro forma effect of reinstating the AT-1 principal on its common equity tier 1 (CET1) ratio, including profits, as of June 30, 2026, would be 250 basis points, while its Tier-1 ratio would remain unchanged at 14% on a pro forma basis. The Hindu reports that the ruling means the bank faces a liability of ₹8,415 crore from the reinstatement.

Results and share price

Yes Bank reported on Saturday, October 17, a second-quarter profit of ₹1,080 crore, up 65%, according to Reuters as carried by The Hindu BusinessLine. The bank said that figure does not reflect the ruling, and that had the impact been recognized it would have reported a quarterly loss of ₹5,217 crore after tax.

Reports differ on the fall in Yes Bank's share price on Thursday: Reuters says 13%, while The Indian Express says 14.43% to ₹18.15. The Hindu reports that the shares fell a further 3.20% on Friday, closing at ₹17.57 on the BSE.

What the reports do not say

The reports read do not say which legal options the bank is considering, whether it will seek a review of the judgment, or how it will treat the reinstated bonds in its accounts beyond the pro forma figures above.