Axis Trustee Gives Yes Bank Three Working Days to Restore ₹8,415 Crore AT1 Bonds

October 31, 2026October 31, 2026 admin 0 Comments Additional Tier 1 bonds, AT1 bonds, Axis Trustee, Bank Resolution, banking capital, banking risk, CET1 ratio, investor protection, Supreme Court, yes bank

Axis Trustee Services has given Yes Bank three working days to restore ₹8,415 crore of Additional Tier-1 (AT1) bonds that were written off in March 2020. The demand follows the Supreme Court’s October 15, 2026 judgment upholding the Bombay High Court’s decision to set aside the write-off.

The trustee has asked Yes Bank to reinstate the bonds in its books and register of bondholders, reverse the relevant write-off entries with NSDL and CDSL, and take steps to restore the bonds on the BSE and NSE, including resumption of trading.

The Supreme Court had ruled that the bank’s administrator exceeded his authority when the AT1 bonds were written down during the lender’s 2020 reconstruction. The court’s decision followed a prolonged legal dispute initiated by the trustee and bondholders.

The restoration has significant implications for Yes Bank’s capital position. Management has estimated that reinstating the bonds would reduce its CET1 ratio by approximately 240 basis points, taking it from the reported 13.7% to around 11.4% on a pro forma basis as of September 30, 2026. The bank has said it does not currently need to raise capital immediately.

The dispute also extends to unpaid coupons. The trustee has sought clarity on coupon obligations covering the period from March 14, 2020 to October 15, 2026, along with the 9% coupon that fell due in October and the 9.5% coupon due in December.

Axis Trustee has warned that failure to comply could lead to contempt proceedings before the Supreme Court against the bank and responsible directors and officers. Yes Bank has rejected the allegation of wilful disobedience, describing the assertions as baseless, while stating that it remains committed to complying with the Supreme Court judgment and applicable law.

The case has wider implications for bank capital instruments, investor protection, AT1 bond governance and resolution frameworks. It also highlights the importance of clearly defining the legal authority, loss-absorption mechanisms and investor rights associated with regulatory capital instruments.