Axis Trustee Services has demanded that India's Yes Bank restore its written-off Additional Tier 1 (AT1) bonds, valued at ₹8,415 crore (approx. $1 billion), within three days. The trustee warned it would initiate contempt of court proceedings if the bank fails to comply.
The demand follows a Supreme Court judgment on October 15 that invalidated Yes Bank's decision to write off the bonds. The write-off was part of the bank's reconstruction scheme during its financial crisis.
Axis Trustee, which represents the bondholders, has accused the private sector lender of "wilful disobedience" of the Supreme Court's order. The firm has made it clear that failure to comply could trigger legal action against the bank for contempt.
In a stock exchange filing, Yes Bank acknowledged receiving the communication but denied the allegation of deliberate non-compliance. The bank stated that it is currently "examining the compliance requirements" of the court's judgment.
AT1 bonds are perpetual debt instruments that banks use to bolster their core capital base to meet regulatory requirements. They are considered high-risk, as they can be written off if a bank's financial position deteriorates to a critical level.
This legal and financial dispute is one of the most significant in India's banking sector in recent years. Its final outcome could have a substantial impact on bondholder rights and the procedures for bank restructuring in the future.
Source: Stock exchange filing
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