Yes Bank AT1 bondholders seek regulatory, govt intervention to enforce SC order
Yes Bank Ltd's additional tier-I (AT1) bondholders have written to the government and financial market regulators seeking timely implementation of a recent Supreme Court judgment in their favour. On 15 October, the apex court had upheld a Bombay High Court verdict that set aside the March 2020 write-off of AT-1 bonds worth ₹8,415 crore.
The Yes Bank AT1 Bond Holders Association on Tuesday wrote separately to the Reserve Bank of India (RBI), Securities and Exchange Board of India (Sebi) and the finance ministry, seeking time-bound action. The letters sought the restoration of investors’ written-down principal, payment of coupons and interest legally due, and clear implementation timelines from Yes Bank and relevant authorities. It has sought written responses from RBI and Sebi within 15 days, while asking the finance ministry to coordinate a time-bound response across institutions.
The association represents 389 individual bondholders with an aggregate exposure of approximately ₹160 crore. Of these, 293 are aged 60 or above, including 24 who are over 80, according to the letters. The association said many investors had relied on their retirement savings, including provident fund and gratuity, to purchase the bonds. Twelve members died during the court proceedings, according to its submissions.
“The Supreme Court has given the judgment in our favour, dismissing the appeals. We want RBI and Sebi to step in and enforce their own regulatory role,” said Saurabh, a Bengaluru-based member of the association whose parents hold these bonds.
“Our demands are simple: we want our principal back,” he said, adding that the association wants the bank to restore the principal and pay interest legally due to investors.
“It is simple, Yes Bank has to pay off, they have been dilly dallying. There is no regulatory basis which Yes Bank can still continue assessing the situation. The coupon date was due previously on the 18th of this month,” he said.
The association asked RBI to examine Yes Bank’s position on the write-off and require it to provide a reasoned, series-wise explanation of the affected principal and outstanding coupons. It has also sought a clear implementation timetable, rather than leaving the matter under an open-ended internal assessment.
The association separately flagged the unpaid coupon on the bank’s 9% AT1 bonds, which fell due on 18 October. On 24 October, Yes Bank said that it was still assessing the apex court’s judgment and retained discretion over the coupon under the applicable bond documents.
The association asked RBI to examine the contractual provisions governing the coupon and how the bank’s position squares with paragraph 81 of the SC judgment, which states that annual coupon payments remain unaffected by the outcome of the appeals and must be made in accordance with the information memoranda.
The letter also seeks a review of earlier investor complaints that were declined, closed or left unresolved because the matter was sub judice, and clarification on the redress mechanisms available after the judgment.
In its representation to Sebi, the association sought a written report from Axis Trustee Services, the debenture trustee, detailing the steps taken to protect bondholders, its communications with Yes Bank and its proposed actions. It has also asked the market regulator to examine the bank’s disclosures and require it to explain the legal basis for any continuing delay in restoring principal or paying coupons.
The association has further sought an account of Sebi’s earlier enforcement proceedings concerning the sale of AT1 bonds to individual investors, including whether restitution or other investor-redress measures were considered.
In its letter to the finance ministry, the association asked the government to coordinate responses from RBI, Sebi, Yes Bank and Axis Trustee, and establish an inter-agency process identifying the responsible institution, required action and target date. It has also sought a distinct relief process for retail investors, citing the Supreme Court’s observations on the sale of these high-risk instruments to individuals.
“The government has the power to ensure that these things happen,” Saurabh said. “The government also has a moral obligation to ensure that this settles and we get our money back.”