Private sector lender Yes Bank has appealed in the Supreme Court against the Bombay High Court's last month order which had set aside the 2020 decision of the Reserve Bank appointed administrator to write off the additional tier I (AT1) bonds worth Rs 8,400 crore. “The Bank has filed appeal(s) before the Hon’ble Supreme Court of India against the Judgment dated January 20, 2023 of the Hon’ble Bombay High Court setting aside the decision of the Bank to write down AT-1 Bonds,” Yes Bank's spokesperson said on Monday. The Bombay High Court had given the bank six weeks’ time to make an appeal in the Supreme Court. The bank’s Managing Director and CEO Prashant Kumar, last month, had said that there was a very strong reason for the bank to make an appeal before the Supreme Court against the order. The lender, which was under the verge of collapse, was placed under a moratorium by the Reserve Bank in 2020. A new management and board were appointed as part of a rescue plan worked out by the RBI. The RBI had allowed a write off of Rs 8,400 crore on AT1 bonds issued by Yes Bank after it was rescued by State Bank of India (SBI). AT1 Bonds are unsecured bonds which have perpetual tenor. In other words, these bonds, issued by banks, have no maturity date. They have a call option, which can be used by the banks to buy these bonds back from investors. These bonds are typically used by banks to bolster their core or tier-1 capital. A probe by capital markets regulator Sebi had found that the bank facilitated selling of AT1 bonds from institutional investors to individual investors. It found that during the process of selling the AT1 bonds, individual investors were not informed about all the risks involved in subscription of these bonds. The Sebi investigation also found that Yes Bank represented these bonds as a ‘Super FD’ and ‘as safe as FD’ to the investors. Sebi also found that the push from the managing director of Yes Bank to down-sell the AT1 bonds led its private wealth management team to recklessly sell the bonds to individual investors.
