YES Bank AT-1 bondholders have petitioned the RBI, claiming the lender is withholding coupon payments despite a recent Supreme Court verdict. Investors argue the bank is using internal reviews to delay obligations. This creates uncertainty for retail investors holding these high-risk instruments.
The ongoing dispute over YES Bank’s Additional Tier-1 (AT-1) bonds has reached a new stage as a group of individual investors has petitioned the Reserve Bank of India (RBI). The bondholders’ association is asking the regulator to intervene and enforce a Supreme Court judgment concerning the reinstatement and payment of these bonds.
The core of the dispute involves coupon payments that investors claim were due in October 2026. Bondholders argue that YES Bank is citing an internal assessment process to determine if it has the discretion to withhold interest, effectively creating an indefinite delay. Investors assert this stance contradicts the Supreme Court’s recent directives, which mandate that coupon payments should follow the terms outlined in the original Information Memoranda.
These bonds have a contentious history dating back to March 2020, when they were written off during the bank's reconstruction. The Supreme Court's verdict has been a focal point for investors seeking a reversal of that decision. Specifically, the court highlighted that these high-risk financial instruments were designed primarily for institutional investors, such as insurance companies and mutual funds, rather than individual retail investors. The bondholders' association is now seeking accountability for the original sales practices that led to retail exposure in these complex products.
For retail investors, the ambiguity regarding interest payouts presents a significant challenge. The association is pushing for the RBI to require the bank to provide clear, instrument-specific justifications for any withheld payments, rather than relying on blanket claims of discretionary power. They argue that without direct regulatory oversight, the bank may continue to defer restitution through administrative reviews, leaving many individuals without clarity on their investment status.
Investors are now tracking whether the RBI will intervene to provide a time-bound roadmap for the implementation of the court’s orders. The key monitorable will be whether the regulator defines the limits of the bank's payment discretion or allows the current internal assessment process to continue. The outcome of this petition may set a precedent for how the lender manages the remaining obligations related to these specific bonds.