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AT1 Bond case: YES bank to file appeal in SC, says CEO Prashant Kumar – Moneycontrol

YES Bank had written off AT1 bonds worth Rs 8,415 crore as part of the bailout in March 2020.

YES Bank’s managing director and chief executive officer Prashant Kumar said the bank will file an appeal in the Supreme Court in the additional tier-1 (AT1) bonds write-down case.

“We are making an appeal in the honourable Supreme Court. When the judgement was pronounced yesterday, we immediately made a request to the court to give us time to appeal in the Supreme Court and stay on their judgement,” Kumar said during the press conference after the announcement of the quarterly results.

On January 20, the Bombay High court set aside the write-down of additional tier 1 (AT1) bonds in March 2020.

YES Bank had written off AT1 bonds worth Rs 8,415 crore as part of the bailout in March 2020. This irked YES Bank’s AT1 bondholders who moved the court to challenge the decision and get their money back.

Also read: 63 Moons says Bombay HC has set aside YES Bank AT1 bond write off

AT1 bonds are a type of perpetual bonds that do not have any fixed maturity but offer relatively higher rates as those are considered quasi-equity instruments with a larger risk of investment.

Kumar further added that there will be no immediate impact on the bank’s book because after the order, bank has asked time to file appeal in Supreme Court.

“The honourable high court of Bombay has gave us six weeks to make an appeal in the SC and for the next six weeks this order has been put in abeyance,” Kumar said.

In the AT1 bonds case, petitioners have argued that Yes Bank executives misrepresented the risks AT1 bonds carry and sold these instruments as ‘Super FDs’ to existing FD holders promising higher return and safety of a deposit.

Retail investors allege that this was done without explaining the high risk associated with these bonds, especially the provision that says these bonds will be extinguished and capital foregone in the event of a financial failure of the bank.

Earlier, in its counter affidavit, RBI had used strong words discarding the claims by the petitioners.

The RBI had said the action for writing off has been rightly taken under the provisions of the contract between Yes Bank and AT-1 Bondholders and hence, there is no merit in the Petitioners contentions.

Manish M. Suvarna

Manish M. Suvarna is Senior Correspondent at Moneycontrol. He writes on the Indian money markets and the RBI. He tweets at @manishsuvarna15