Yes Bank announced that the Supreme Court has concluded hearing arguments in the case related to the write-down of its Additional Tier-1 (AT-1) bonds and has reserved its order for judgment. According to reports from The Economic Times, the bank stated that if the court's final verdict results in any financial liability, the impact will be recognised in future reporting periods. However, Yes Bank does not anticipate any material financial impact since the write-down was conducted in compliance with applicable terms and regulations. The bank made this announcement in the footnotes to the financial statements released on Saturday, reinforcing its position on the pending legal outcome.
The case traces its origins to one of the most dramatic bank failures in Indian financial history. On March 5, 2020, the central government imposed a moratorium on Yes Bank as the lender teetered on the edge of collapse. The Reserve Bank of India simultaneously superseded the bank's board and appointed an administrator to run its affairs. Within days, the government pushed through the Yes Bank Reconstruction Scheme, which reconstituted the bank and paved the way for a new board.
The administrator, acting on behalf of the bank, wrote down two tranches of AT-1 bonds citing contractual covenants and RBI guidelines. As reported by The Economic Times, the value of the bonds, totalling ₹8,415 crore, was reduced to zero, wiping out the investment for those who had bought them as relatively safe, yield-bearing instruments. The write-down triggered a wave of legal challenges with bondholders filing writ petitions, civil suits and criminal complaints across courts in India starting 2020.
The Bombay High Court ruled against Yes Bank, prompting the bank, RBI and the government to separately file special leave petitions before the Supreme Court challenging that judgment. Final arguments before the Supreme Court concluded on February 26. According to The Economic Times, while most of these proceedings remain pending, a batch of writ petitions before the Bombay High Court and one before the Madras High Court reached more advanced stages of adjudication.
