Finance Ministry moves Supreme Court against HC order quashing Yes Bank's AT-1 bonds write-off
Finance Ministry on Monday moved the Supreme Court against the Bombay High Court’s January order that quashed Reserve Bank of India’s and Yes Bank's decision to write off additional tier-1 (AT-1) bonds worth Rs 8,415 crore. The ministry sought setting aside of the HC judgment on the ground that its implementation would result in “deleterious consequences” for the banking system and the future resolution of any bank facing similar level of stress.
A bench led by Chief Justice DY Chandrachud admitted the government’s appeal and tagged it along with similar appeals filed by RBI and Yes Bank, It also posted the matter for further hearing on October 16.
The apex court had in March extended the stay granted by the HC on January 20.
Yes Bank had in March 2020 written off AT-1 bonds as part of a reconstruction scheme. Institutional investors such as mutual funds, including Reliance Nippon, and bondholders, including financial institutions and retail individual investors had put as much as Rs 8,415 crore in Yes Bank's AT-1 bonds.
Subsequently, the bank's AT-1 retail bondholders moved the HC to challenge the written off decision and reclaim their money. The high court ruled in their favour but stayed the order for a period of six weeks, on the request of Yes Bank.
Thereafter, Yes Bank and RBI moved the SC challenging the high court ruling.
“Whether the decision-making process has been adhered to and whether it is within the competence of the administrator to write down AT1 bonds are the issues which will have wide ramifications if swarm are not settled by the SC,” the MoF stated in its appeal. The HC should have appreciated that the implications of their order are far-reaching, it said, adding that in the future, given such a
