Yes Bank weighs legal option after SC ruling, stares at 250 bps CET1 impact

Yes Bank is examining its legal options after the Supreme Court dismissed its appeal against the write-down of Additional Tier-1 (AT1) bonds worth ₹8,415 crore in March 2020, following the bank’s reconstruction.

“The Bank respects the judgment of the Supreme Court. The Bank is examining the judgement in detail including evaluating all available legal options and suitable actions / steps going forward,” Yes Bank said in a filing with the stock exchanges on Friday.

The bank also said it had adequate flexibility to manage its capital requirements. “The Bank has access to appropriate capital-management levers, and it preserves the flexibility to undertake additional capital actions, as considered appropriate to pursue its growth objectives,” it stated.

The Supreme Court upheld the Bombay High Court’s January 20, 2023, judgment setting aside the write-down of the AT1 bonds. It consequently dismissed appeals filed by Yes Bank, the Reserve Bank of India (RBI) and the Union government.

The bonds were written down in March 2020 after the government and the RBI stepped in to rescue the crisis-hit lender. Bondholders challenged the decision, and the Bombay High Court subsequently set aside the administrator’s order. The bank, the RBI and the Union government then appealed to the Supreme Court.

The ruling means Yes Bank faces a liability of ₹8,415 crore arising from the reinstatement of the bonds.

On the impact of the ruling on its capital position, the bank said the pro forma effect of reinstating the AT1 bond principal on its Common Equity Tier-1 (CET1) ratio, including profits, as of June 30, 2026, was expected to be 250 basis points. However, its Tier-1 capital ratio would remain unchanged at 14% on a pro forma basis, it added.

“The Bank remains firmly focused on the continued strength of its franchise and on providing customers with consistent service and support across their banking requirements,” it said.

The ruling weighed on the bank’s shares, which fell 3.20% to close at ₹17.57 on the BSE on Friday.