Axis Trustee has threatened contempt proceedings against Yes Bank if it does not reinstate ₹8,415 crore in AT-1 bonds within three days. This follows a Supreme Court ruling upholding the reversal of the 2020 bond write-down. Investors are now watching how the bank addresses this significant liability, as the lender maintains it is currently reviewing the legal path for full compliance.
The legal battle surrounding Yes Bank’s Additional Tier-1 (AT-1) bonds has intensified, with Axis Trustee Services issuing a notice threatening contempt of court proceedings against the bank. The trustee, acting on behalf of bondholders, has demanded that the bank immediately reinstate bonds worth ₹8,415 crore. These specific instruments were written down during the bank’s crisis in March 2020.
Following a lengthy legal process, the Bombay High Court ruled in January 2023 that the write-down was invalid. The Supreme Court has since upheld this decision, setting the stage for the current dispute. The trustee has given the bank a three-day window to complete the reinstatement, which includes updating records with NSDL and CDSL and restoring the trading status of the bonds on the BSE and the NSE.
Yes Bank has responded by dismissing the allegations of willful disobedience. In an official exchange filing, the bank clarified that it is currently reviewing the Supreme Court’s judgment to determine the appropriate legal path for compliance. The management stated that its internal review is intended to ensure that the actions taken are legally sound, rejecting the trustee’s characterization of its conduct as obstructive.
The bonds in question, which carry coupon rates of 9% and 9.5%, were a point of contention for years. For investors, the reinstatement of these bonds is a significant development, as it requires the bank to re-integrate these liabilities into its balance sheet. This process involves complex corporate and regulatory actions that go beyond simple accounting entries.
The immediate focus for stakeholders is how the bank navigates this three-day deadline. Whether the bank meets the timeline or seeks further legal clarification will determine the next phase of this dispute. Investors are watching for further updates from the bank, as this situation impacts the lender's financial obligations and long-term capital structure recovery.