In a relief for Yes Bank, Supreme Court on Friday has put on hold Bombay High Court's ruling on writing down AT-1 bonds.
In January, Bombay High Court quashed a decision taken by the Yes Bank Administrator on March 14, 2020 to write off Additional Tier 1 (AT-1) bonds noting the Administrator did not have the authority to take such a decision.
Last month, Yes Bank and Reserve Bank of India had filed an appeal in the Supreme Court against the Bombay High Court’s ruling favouring bondholders.
On Friday, RBI argued at the apex court that not putting the HC order on hold will put Yes Bank in non-viable category again and will put small depositors in jeopardy. The bondholders said writing off the bonds was not correct in law.
Yes Bank Ltd had written off AT-1 bonds worth Rs 8,415 crore as part of the bailout in March 2020.
The HC, in its judgment, said the Final Reconstruction Scheme of Yes Bank issued by the Reserve Bank of India did not engulf within its fold writing down/off the AT-1 bonds.
The court further held when the RBI prepared the draft scheme for reconstitution of the bank, it had invited suggestions and objections and it appears the petitioners had raised objection to the writing down of AT-1 bonds and even suggested for their conversion into shares.
"It appears that upon consideration of the objections the Reserve Bank made modification in the draft scheme. It deleted the clause of writing down of AT-1 bonds," the HC said.
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