In a bid to assuage concerns circulating around the implication of the Bombay High Court verdict, which quashes the order of the Reserve Bank of India’s appointed trustee, who wrote down Rs 8,300 crore of additional tier bonds 1 (AT-1), Prashant Kumar, MD & CEO, YES Bank, said the bank would appeal the Bombay HC ruling in the High Court.
Given that he has six weeks to start the appeal, work has begun on this front and lawyers will be appointed soon. It is collected from sources that the RBI can join the bank on appeal. “As this relates to RBI’s rebuilding plan for YES Bank, which it has implemented and approved by the Government of India, RBI can join the appeal process,” a person familiar with the development said.
An email sent to the central bank seeking clarity on the matter remained unanswered as of press time.
Meanwhile, Kumar indicated that if the worst case scenario unfolds, ie the SC upholds the decision of the Bombay High Court, it will not affect the overall capital position of YES Bank. “In the best case scenario, Tier 1 or CET-1 capital may be reduced by three percent and the AT-1 bond share will increase by three percent. Therefore, the overall Tier 1 capital and overall capital position of the bank will remain unchanged,” he explained.
However, it is understood that the grounds for appeal are in favor of the bank and therefore it is not currently reserving capital in the event that the worst case scenario is presented. “First of all, these are perpetual instruments, and it is the bank’s decision to grant the call options on the (AT-1) bonds. The payment of the coupon is also at the discretion of the bank, ”he said.
