YES Bank shares fell as much as 20% during trading on October 15, 2026, after the Supreme Court upheld a judgment cancelling the bank's decision to wipe out ₹8,415 crore of Additional Tier-1 (AT1) bonds during its 2020 rescue. The verdict raises concerns about the bank's obligations to bondholders and the effect on shareholders, with the immediate trigger being the Supreme Court's decision to uphold the Bombay High Court's January 2023 ruling against the AT1 bond write-off. When the bonds were written off, their value was reduced to zero, but overturning that decision brings the bank's obligations towards those investors back into focus. The Supreme Court dismissed appeals against the Bombay High Court's judgment, ruling that the administrator lacked authority to write off the bonds after the reconstruction scheme came into effect. Additional Tier 1 (AT-1) bonds are perpetual instruments issued by banks to increase their capital base and are riskier than traditional bonds, with higher interest rates. The RBI can ask a bank to cancel them if the bank is in trouble.
Following the Supreme Court's ruling, Yes Bank is set to file a review petition in the Supreme Court against the apex court's judgment upholding the Bombay High Court order that set aside the write-down of ₹8,415 crore of Additional Tier-1 (AT1) bonds. According to The Economic Times, the Reserve Bank of India is evaluating if it wants to join the private lender to seek a review of the ruling, with the RBI seeking legal opinion on the matter. The move would mark the next legal step for the lender after the apex court upheld the Bombay High Court judgment quashing the March 2020 write-down of the AT1 instruments. The bank's board, which is scheduled to meet on October 17 to review its second quarter results, will deliberate on the matter. The ₹8,415 crore payment will impact the bank's core capital that is reflected in capital adequacy ratio and not its net profit. In an exchange disclosure, Yes Bank said it was currently reviewing the Supreme Court order and its implications and will make suitable disclosures in due course.
The ₹8,415 crore bond amount represents approximately 2.42 times FY6 standalone net profit of ₹3,476 crore and equals 16.1% of June-end net worth of ₹52,338 crore. According to CRISIL's August 4, 2026 assessment, a complete reversal of the write-off could reduce the core equity capital ratio by approximately 2.3–2.5 percentage points, while increasing AT1 capital by a similar amount. Yes Bank expects its core capital ratio to decline by 250 basis points following the Supreme Court's decision, with the bank's Tier-1 capital ratio standing at 14% on a pro forma basis. The bank is assessing the implications of Thursday's ruling and said further disclosures would be made in due course. While reports indicate YES Bank must honour bonds carrying coupon rates of 9.5% and 9%, AT1 bond coupons are discretionary and non-cumulative, meaning unpaid interest does not automatically accumulate like conventional bonds. The precise amount payable, including any past interest, will depend on detailed judgment, bond terms and the bank's subsequent disclosures.
S&P Global Ratings expects the bank to absorb the capital impact without an immediate effect on its credit ratings. However, the ratings agency noted that the development could weigh on future earnings. S&P expects the bank's risk-adjusted capital ratio to range between 8% and 8.5% through March 2028, down from 9% in March 2026. The ratings agency said it was unclear whether Yes Bank would challenge the Supreme Court's ruling. S&P assessed that Yes Bank's credit profile can withstand the Supreme Court of India's ruling that the write-off of its additional Tier 1 (AT1) bonds was illegal. The agency underscored that Yes Bank's regulatory capital is adequate, with the bank's CET1 ratio standing at a healthy 13.87% as of March 2026, providing a significant cushion to absorb the anticipated 250 basis point impact while remaining well above the minimum regulatory requirement of 5.5%. S&P noted that the ruling relates to procedural lapses in the write-down process rather than questioning the instrument's fundamental loss-absorbing characteristics.
Following the news, investors grew concerned about the bank's financial health, resulting in a 14% crash in Thursday's trade. The sell-off extended into Friday's session, with the stock falling another 3.42%, bringing the total losses to 17% for October and 19% for 2026. The bank remains focused on strengthening its franchise and providing consistent service and support to customers across their banking requirements, as stated in its regulatory filing. The bank is expected to exhaust the legal remedies available to it before taking a final call on the accounting and capital treatment of the bonds, according to sources familiar with the matter. The board of Yes Bank, which is scheduled to meet on October 17 to review its second quarter results, will deliberate on the matter.
