Yes Bank has not decided on coupon payments on its additional tier-1 (AT-1) bonds, saying it retains discretion under the terms of the instruments. In an exchange filing on Saturday, it said it was still evaluating the Supreme Court judgment that set aside the Rs 8,415 crore write-off.
Start investing with just ₹10K & grow your wealth with fixed return opportunities.
Invest Now
What Yes Bank Said in Its Filing
- Bondholders have asked about the coupon on the 9% AT-1 bonds, which fell due on October 18, 2026.
- The bank will communicate its decision, if any, on exercising coupon discretion once its assessment is complete.
- Further disclosures will follow under listing regulations, and operations continue uninterrupted.
Reuters: Payout Unlikely This Year, Review Planned
Reuters reported, citing two people familiar with the matter, that Yes Bank is unlikely to pay AT-1 coupons due this year. One source said the bank is preparing to seek a review of the ruling. The sources said payment can be considered only after the bonds are reinstated on the bank’s balance sheet. The bank’s Saturday filing, as reported, does not mention a review.
Bondholders have written to Axis Trustee Services seeking written confirmation on whether the coupon was paid, cancelled or remains outstanding and are pressing for coupons unpaid since the 2020 write-off.
Court Direction vs Discretionary Coupons
The Supreme Court directed that annual coupons remain unaffected by the outcome of the appeals and be paid in accordance with the information memoranda. The bond terms, however, make coupons discretionary and non-cumulative. ICRA noted in 2019 that cancelling discretionary payments is not an event of default and that payments depend on the bank meeting minimum capital ratios. In 2023, Yes Bank’s then-CEO said the bank had discretion except when paying a dividend.
| Series | Size | Coupon date | Annual coupon (est.) |
| 9% AT-1 | Rs 5,415 crore | October 18, 2026 (fell due) | About ₹487 crore |
| 9.5% AT-1 | Rs 3,000 crore | December 23, 2026 (scheduled) | About ₹285 crore |
The coupon estimates are our calculation from series size and rate. The bank has not disclosed them, and they exclude any claim for coupons unpaid since 2020.
What the Court Actually Held
The court found that the government had dropped the write-down clause from the final scheme, and that the administrator acted a day after the scheme was notified. The ruling did not say AT-1 bonds can never be written down. It held that this write-down did not follow the permitted legal process. The bench also called the RBI a “mere bystander” as Yes Bank’s CET-1 ratio fell to 0.6%.
Latest Bond Updates:
- HDFC Bonds Explained: Types, Yields, Safety, and Ratings
- Indian Bond Yields Rise as Markets Await US Fed Rate Decision
- FD for Minors in India: Account Rules, Taxation & Required Documents
Capital Cushion and Wider Fallout
Yes Bank says reinstating the principal would cut its CET-1 ratio by 250 basis points as of June 30, with Tier-1 unchanged at 14%. It says it has various capital-management options and flexibility to take further capital actions, if required, to support growth. It has not recognised any impact in its September-quarter results.
Mutual funds are also affected. In a separate SEBI matter, Nippon Life India AMC said on Thursday it had received in-principle approval to settle a dispute over Yes Bank AT-1 investments after paying Rs 96.76 crore. It said any amounts recovered after the court proceedings would go to investors in the relevant schemes.
What Happens Next
Yes Bank has said it will make further disclosures once its assessment is complete. These should show how it treats the October coupon and the December 23 payment, and whether a review petition follows. Any decision is likely to be measured against the court’s direction on coupons.
Disclaimer
Fixed returns do not constitute guaranteed or assured returns. Investments in corporate debt securities and municipal debt securities/securitized debt instruments are subject to credit risks, market risks, and default risks, including delay and/or default in payment. Read all the offer-related documents carefully. This blog/article should not be construed as financial advice or as an offer or recommendation to buy or sell any security or any products/services of/on GoldenPi or any product/services of its third-party client(s). For a detailed calculation of YTM, visit our website. T&C’s Apply.
