Axis Trusteeship Services Ltd (ATSL) has escalated its enforcement action against Yes Bank, warning of contempt proceedings before the Supreme Court if the bank fails to comply with the October 15, 2026 judgment. In its latest communication dated October 28, 2026, the trustee alleged wilful disobedience by the lender of the Supreme Court ruling and demanded immediate restoration of the ₹8,415 crore AT-1 bonds that were written down by the bank's then Administrator in March 2020. ATSL has given Yes Bank a three-day deadline to restore the bonds and take all necessary corporate actions, threatening to initiate contempt proceedings without any further notice, entirely at the bank's risk as to costs and consequences. The trustee has specifically warned that proceedings would be initiated against the Bank and its directors and officers responsible for compliance with the judgment.
Yes Bank has responded to the trustee's demands, acknowledging the Supreme Court judgment and reiterating its commitment to compliance. In its October 30 filing to the exchanges, the bank stated that it has communicated with Axis Trustee Services regarding the Supreme Court's judgment concerning the AT1 bond write-off. The bank responded on October 30, reiterating its commitment to comply with the Supreme Court's judgment and applicable law. However, Yes Bank rejected the allegation that it had wilfully disobeyed the court, stating that the Bank does not accept the characterisation in your Letter of its conduct as wilful disobedience and the assertions in your Letter are baseless and without merit. The bank continues to evaluate the judgment, including the options and actions available to it, while noting that reinstating the principal would reduce the bank's CET1 ratio by about 240 basis points on a pro forma basis. Yes Bank underscored that its examination of these matters and evaluation of the consequences are towards compliance with the SC judgment, further emphasizing its commitment to legal compliance.
ATSL has issued a comprehensive notice to Yes Bank seeking re-instatement and activation of the AT-1 Bonds in the bank's books and in its register of debenture holders/beneficial owners or their successors. The notice demands that the bank carry out the requisite corporate actions with NSDL and CDSL for reactivation of the two bond series, for reversal of all entries, write-offs and cancellations effected pursuant to the impugned decision. Additionally, the trustee wants the Bank to take all steps with BSE and NSE for restoration of the said bonds on their respective platforms, including resumption of trading therein. This comprehensive approach reflects the trustee's intention to ensure complete restoration of the bonds' legal and trading status, as reported by The Hindu BusinessLine.
The Supreme Court on October 15, 2026, dismissed appeals filed by Yes Bank, the Reserve Bank of India (RBI) and the Union government, upholding a Bombay High Court ruling that the bank's administrator had no authority to write down the AT1 bonds during the lender's 2020 rescue. A Bench of Justices Dipankar Datta and Augustine George Masih dismissed appeals challenging the high court's January 20, 2023 judgment, with the apex court stating "We see no reason to interfere with the impugned judgment." The appeals had been filed by Yes Bank, the Reserve Bank of India and the Centre after the court had reserved its order on May 20 after hearing all sides. Reinstating the bonds would reduce Yes Bank's common equity tier-1 (CET1) ratio by about 240 basis points, according to the bank's management. However, the bank's overall Tier 1 capital ratio is expected to remain unchanged at 14% on a pro forma basis. The bank is unlikely to pay coupons due this year on its AT-1 bonds despite the Supreme Court ruling overturning their write-off, as reported by Reuters, with sources citing that the bond documentation gives the bank discretion over coupon payments.
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 association's submissions, many investors had relied on their retirement savings, including provident fund and gratuity, to purchase the bonds. The association said twelve members died during the court proceedings, highlighting the significant impact on elderly investors. The trustee has called a bondholders' meeting for November 16, 2026, and is examining its legal options if Yes Bank delays implementing the judgment or defaults on coupon payments. The association has also written separately to the RBI, SEBI and finance ministry, seeking written replies within 15 days, with the association asking the RBI to examine how the bank's position aligns with paragraph 81 of the Supreme Court judgment, which states that annual coupons are not affected by the outcome of appeals. During the hearing, the Centre warned that nearly ₹1 lakh crore of AT1 bonds are outstanding across Indian banks, and that an adverse ruling could weaken investor confidence in these instruments and complicate future bank rescues.
