Supreme Court Declares AT1 Bond Write-Off Illegal
The latest yes bank news centers on a major legal setback for both the Centre and the lender, as the Supreme Court upheld a previous high court decision. The top court dismissed the legality of the Rs 8,415 crore Additional Tier-1 (AT1) bond write-off, setting off immediate ripples across the financial markets.
Why Yes Bank Share Is Falling Today
Following the judicial announcement, the market reacted with a sharp and immediate drop in valuation. Observers tracking why the yes bank share is falling noted a 10% crash in the equity price as investors digested the legal implications of the verdict regarding the quashed bond cancellation.
Background of the Financial Collapse and Bonds
The contested financial instruments were originally written off back in March 2020. This controversial action formed a key component of a broader reconstruction scheme put together after the institution suffered a severe financial collapse.
A broad mix of participants had originally put money into these instruments, including retail investors and large institutional entities such as mutual funds like Reliance Nippon. Combined, their total investment reached Rs 8,415 crore.
Legal Battle Journey to the Top Court
Dissatisfied with the cancellation of their investments, the affected bondholders took legal action by approaching the Bombay High Court to challenge the decision and seek recovery. In January 2023, the High Court delivered a judgment in favor of the investors. Unhappy with that outcome, the institution, alongside the Reserve Bank of India and the Centre, elevated the challenge to the Supreme Court, which has now finalized the matter by upholding the lower court's relief to the investors.
Sources: The Economic Times, Reuters, The Economic Times, Livemint.
