Yes Bank AT-1 bondholders still await clarity on their money nearly a month after SC verdict

Nearly a month after the Supreme Court overturned Yes Bank’s ₹8,415-crore additional tier-I (AT-1) bond write-off, investors who lost their savings are still waiting for the bank to clarify when and how their money will be restored.

For Kailash Mishra, the ₹10 lakh he invested in Yes Bank’s AT-1 bonds was money set aside for the future. For Gunjan Gupta’s family, the investment represented years of her father’s savings. And for Lakhvir Kaur, a 69-year-old homemaker, it was the retirement corpus she and her husband had carefully accumulated over decades.

The wait has become another chapter in a long financial ordeal, for many. Mishra, a 74-year-old retired professional based in Kolkata, said he had almost given up hope of recovering his investment after years of litigation. The Supreme Court verdict has revived his expectations, but he has heard little from the bank about when the money might be restored.

In its 15 October ruling, the Supreme Court dismissed appeals by Yes Bank, the Reserve Bank of India (RBI) and the Centre, upholding a Bombay High Court order that held that the bank's administrator had no authority to write down the bonds as part of the lender's 2020 rescue.

A similar uncertainty surrounds the family of Kumar Awasthi, an 85-year-old Army veteran who invested ₹1.3 crore in 13 AT-1 bonds in 2017. His son Amit Awasthi, 47, said the money had been earmarked for his grandchildren, including their future marriages and other family expenses. The family moved money from a fixed deposit at HDFC Bank after a relationship manager, who had previously handled their banking, recommended what he described as "super FDs" for senior citizens.

Amit alleged that the family was never informed about the risks associated with the instruments and that documents were signed and a demat account opened without their knowledge. The bonds paid interest for two years before being written off in March 2020.

Super FDs

The consequences have been particularly personal for Gunjan Gupta. Her father, YV Gupta, had invested a substantial amount in the bonds after bank representatives presented them as "super FDs" offering attractive returns, without adequately explaining their nature and risks.

Her father died in 2024. Gunjan believes the financial loss and the guilt of having lost a substantial portion of the family's savings took a heavy emotional toll on him.

"He was in such constant guilt because of this that because of him, we have lost such a big chunk of money. He could not handle the pressure of doing such a thing. That has caused him a lot of suffering. He was so anxious all the time," Gupta said. He died without seeing a resolution.

For Kaur, too, the investment was never meant to be a risky financial bet. She and her husband had kept their savings in fixed deposits with HDFC Bank and State Bank of India. When their relationship manager moved to Yes Bank, he persuaded them to shift the money into five AT-1 bonds worth ₹50 lakh, which they understood to be a safer, higher-interest alternative to fixed deposits.

"My husband and I trusted the relationship manager, but in hindsight, it was obviously a mistake. That was our retirement fund, which we had kept safe," Kaur said. The couple realised the nature of the instruments only after the 2020 write-off.

AT-1 bonds

AT-1 bonds are perpetual debt instruments that qualify as additional Tier-I capital under Basel III norms. Their terms include triggers linked to a bank's capital position. If these triggers are breached, interest payments may be suspended, and the bonds could also be written down or converted into equity.

In 2022, the Securities and Exchange Board of India imposed a ₹2-crore penalty on Rana Kapoor, former Yes Bank chief, in connection with the mis-selling of AT-1 bonds.

An email sent to Yes Bank seeking its response did not elicit a reply till press time.

Meanwhile, Nimish, a co-founder of the Yes Bank AT-1 Bond Holders Association, which represents around 400-450 affected investors, said a large proportion of its members were senior citizens. Many had invested to supplement their retirement income, while some had died during the years of litigation. Last month, Mint reported that the association had written to Yes Bank, Axis Trustee Services, the RBI, the finance ministry and SEBI, seeking action following the Supreme Court verdict.

The Supreme Court directed that annual coupon payments remain unaffected and be made in accordance with the bonds' information memoranda. Since the ruling, Yes Bank has maintained that it is examining the judgment and evaluating its available legal options. The lender has also flagged the potential capital impact of reinstating the bonds.

Investors, however, believe the bank has had sufficient time to understand the implications of the verdict and should now move towards implementing it.

Legal experts believe Yes Bank has limited room to challenge the ruling.

"The judgment is a substantial relief, but reinstatement restores the bonds and the rights attached to them; it does not make the principal immediately repayable. The immediate issue is implementing that restoration in investors' accounts. Any sale thereafter would depend on market liquidity and price, with no assurance of recovery at face value," said Siddharth Batra, an advocate-on-record at the Supreme Court.

Siddharth Kumar, principal associate at BTG Advaya, echoed this view, saying the bank had very limited legal options left.

"The remaining possibility is a review petition before the Supreme Court, but the grounds for such a petition are narrow," Kumar said. If the bank fails to implement the order, investors could consider filing a contempt petition or a commercial suit before the Bombay High Court based on the terms of the information memorandum, he added.

The verdict may have settled a crucial legal question. But for these families, the real victory will come only when the money they lost finally finds its way home.