Yes Bank shares fell 10 per cent on Thursday after the Supreme Court upheld the quashing of its Rs 8,415-crore AT-1 bond write-off. At 2:35 pm, the stock hit the lower circuit at Rs 19.08. The court dismissed appeals, leaving the earlier judgment in favour of the bondholders undisturbed today.
At 2:35 pm, Yes Bank shares fall to trade at Rs 19.08 apiece, down Rs 2.12 or 10 per cent, hitting the lower circuit, as investors reacted to the Supreme Court's decision.
Shares of Yes Bank plunged 10 per cent on Thursday after the Supreme Court upheld the Bombay High Court’s judgment quashing the lender’s Rs 8,415-crore additional tier-1 (AT-1) bond write-off, dealing a setback to the private sector bank.
At 2:35 pm, Yes Bank shares fell to trade at Rs 19.08 apiece, down Rs 2.12 or 10 per cent, hitting the lower circuit, as investors reacted to the Supreme Court’s decision.
A bench of Justices Dipankar Datta and Augustine George Masih dismissed the appeals challenging the Bombay High Court’s judgment, saying it saw no reason to interfere with the ruling in favour of the bondholders.
“Therefore, for the reasons assigned in our judgment, we have held that we see no reason to interfere with the impugned judgment. The appeals are dismissed," the bench said.
The Supreme Court examined whether the bank’s administrator had the authority to write off the AT-1 bonds without an explicit provision in the reconstruction scheme and whether the action complied with the Reserve Bank of India’s (RBI) master circular and the terms governing the bonds.
The ruling upholds the Bombay High Court’s decision to set aside the write-off, which had been carried out as part of Yes Bank’s 2020 reconstruction following a financial crisis that led to the RBI stepping in to rescue the lender.
AT-1 bonds are perpetual debt instruments issued by banks to strengthen their regulatory capital. They carry higher risks than conventional bonds and can be written down or converted into equity under specified circumstances, subject to the applicable regulatory framework and contractual terms.
The dispute centres on the legality of Yes Bank’s decision to write off the Rs 8,415 crore worth of AT-1 bonds during the reconstruction process. The Supreme Court’s dismissal of the appeals leaves the High Court’s judgment undisturbed, marking a setback for the bank in its legal battle over the instruments.