Yes Bank has maintained that the write-off of its AT1 bonds during the 2020 reconstruction process was legally valid, even as the matter continues to remain under judicial review, as per news reports.
The lender came under regulatory intervention in March 2020 after financial stress linked to deteriorating asset quality and governance concerns intensified pressure on the bank.
Following the crisis, the Reserve Bank of India implemented a reconstruction plan supported by the State Bank of India and a consortium of lenders to stabilise operations.
During the restructuring, Additional Tier 1 bonds worth nearly ₹8,400 crore were reduced to zero, resulting in complete losses for investors holding those instruments.
Equity shareholders were not subjected to a similar extinguishment, although 75% of their holdings remained locked in for a 3-year period after the rescue plan.
The AT1 write-off triggered legal action from bondholders, who challenged the decision before courts.
The dispute gained further significance after the Bombay High Court ruled against the bond extinguishment and observed that the RBI-appointed administrator had exceeded his powers after the bank’s reconstruction process had begun.
That ruling was subsequently challenged before the Supreme Court by Yes Bank, RBI and the government.
In its Q4FY26 disclosures, Yes Bank stated that any financial implications arising from the litigation would be recognised in future reporting periods if required.
The bank, however, said it does not expect any material liability because the write-off was undertaken in accordance with the contractual structure of AT1 instruments and prevailing regulatory norms.
AT1 bonds are perpetual capital instruments issued by banks under Basel III regulations to strengthen core capital and absorb losses during periods of severe financial stress.
The write-down of AT1 instruments has also occurred in overseas banking systems.
In 2023, Swiss regulators ordered the complete write-off of around $17 billion worth of AT1 bonds issued by Credit Suisse as part of the bank’s emergency merger with UBS.
Read More: ICICI Bank Plans to Raise Foreign Transaction Fee on Debit Cards to 3.5% Effective June 21, 2026!
As of 21 May 2026, at 9:16 AM, Yes Bank Ltd share price is trading at ₹22.29 per share, reflecting a surge of 1.27% from the previous closing price.
The Yes Bank AT1 bond dispute continues to remain an important legal and regulatory case for India’s banking sector, with the final outcome now dependent on Supreme Court proceedings.
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Published on: May 21, 2026, 9:25 AM IST
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