Yes Bank defers decision on 9% AT-1 coupon

Private sector Yes Bank has said that it will delay coupon payment due on Additional Tier-I (AT-1) bonds till review and that “the bank retains the right to exercise coupon discretion in respect of the bonds”.

Yes has said that it is acting as per the Information Memoranda while it evaluates “all available options and suitable actions/steps going forward in respect of the (Supreme Court) judgement”.

The Supreme Court had on 15 October declared that the write down was wrongly carried out by the administrator in charge of reconstruction, when RBI’s rules require eligible amounts to be written down by either the regulator or the bank itself prior to reconstruction.

AT-1 bonds form a small part of a bank’s core Tier-I capital. The bonds pay interest to investors but are also considered loss absorbing if they can prevent a bank from turning insolvent. Whereas Tier 2 capital absorbs losses in the event of a bank’s liquidation.

Yes had issued Basel III compliant AT-1 bonds in the form of non-convertible debentures for ₹3,000 crore in December 2016, with a further tranche of issued for ₹5,415 crore in October 2017. For both sets of AT-1 bonds, Axis Trustee Services was appointed as the trustee company and the AT-1 bonds were regulated by an RBI Master Circular.

But under severe financial stress by 2020, Yes had to be revived through a Reconstruction Scheme, by the government, RBI and State Bank of India, which involved the administrator in charge of reconstruction deciding to write down the bonds.

Public sector State Bank of India (SBI) had at the time invested ₹6,050 crore taking its equity shareholding in Yes to 48.21 per cent. In September 2025, SBI sold some Yes shares to Sumitomo Mitsui Banking Corporation (SMBC), at ₹21.50 per equity share for ₹8,888 crore. SBI continues to hold a 10.78 per cent stake in Yes.

“The question is whether the administrator can be said to have exercised the power vested in the RBI. We hold he cannot,” notes the court in its judgement. “The payment of annual coupon rate shall remain unaffected by the outcome of these appeals and must be made in terms of the Information Memoranda,” it added.

Yes Bank has said that day-to-day operations and customer services continue seamlessly across all branches and digital channels without interruption.