Supreme Court blocks AT1 bond write-down, reviving ₹8,415 crore liability for YES Bank

On 15 October, a Supreme Court bench concluded that the administrator appointed during YES Bank's 2020 rescue lacked legal power to write down the bank's ₹8,415 crore AT1 bonds. The court set aside the earlier write-off, noting that the reconstruction plan did not grant such authority and raising concerns about the sale of risky AT1 instruments to retail investors. While bondholders will receive ongoing coupon payments, the ruling stops short of ordering full repayment, leaving the bank to determine how to account for past arrears.

Rating agencies warn that a full reversal could shave 230-300 basis points from the bank's CET1 ratio, potentially lowering it to roughly 11-11.5 %. YES Bank, now controlled by Japan's Sumitomo Mitsui Banking Corporation after acquiring a 20 % stake from SBI, has posted strong FY26 results but must manage the capital impact. Shares fell sharply after the verdict, and the bank said it would review the judgment and provide further details.