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RBI directs Yes Bank not to pay interest on Upper Tier-II bonds

The bank would not be able to pay interest of 10.25 per cent on the Upper Tier-II Bonds due for payment on June 29, Yes Bank said in an exchange filing.

By: ENS Economic Bureau | Mumbai | Published: June 23, 2020 3:04:07 am
yes bank, yes bank crisis, yes bank shares, sbi investment in yes bank, rbi on yes bank, reserve bank of india, express editorial, indian express The bank had earlier sought the RBI approval for payment of interest for the Upper Tier-II bonds. (File Photo)

The Reserve Bank of India (RBI) has directed Yes Bank not to pay interest on its Upper Tier-II bonds, which will be due on June 29 on account of inadequate capital levels.

The bank would not be able to pay interest of 10.25 per cent on the Upper Tier-II Bonds due for payment on June 29, Yes Bank said in an exchange filing. “We would like to inform that Reserve Bank of India has expressed its inability to accede to the bank’s request for payment of interest due as on June 29, 2020, since the bank does not meet the minimum capital requirements currently,” the bank said.

The bank had earlier sought the RBI approval for payment of interest for the Upper Tier-II bonds. “In terms of Information Memorandum dated June 25, 2012 under which the Upper Tier II bonds are issued, the interest amount due and remaining unpaid shall be accumulated and be paid by the bank later, subject to the bank complying with the stipulated regulatory requirement,” the bank had said.

The bank’s CET-I ratio and Tier-I capital ratio stood at 6.3 per cent and 6.5 per cent, respectively, compared to the minimum requirements of 7.375 per cent and 8.875 per cent respectively, its auditors report said. The bank was earlier this year bailed out after the lender’s financials worsened and bad loans shot up. The bank had received capital from investors amounting to Rs 10,000 crore. State Bank of India had invested Rs 6,050 crore in the capital.

Yes Bank had reported a Rs 1,506-crore net loss for the March quarter as against a profit of Rs 1,179 crore in the year-ago period as provisions soared over nine times. It posted a loss of Rs 18,564 crore for the December 2019 in the wake of a spurt in bad loans. Gross non-performing assets of the bank skyrocketed to Rs 40,709 crore in the December quarter from Rs 5,158 crore a year ago.

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