YES Bank has formally approached the Supreme Court of India, seeking a review of its October 15, 2026, judgment. This ruling affirmed the Bombay High Court's decision to overturn the write-down of ₹8,415 crore in Additional Tier-1 (AT1) bonds, a move that has significant implications for the private sector lender.
Background to the AT1 Bond Dispute
The core of the dispute dates back to March 2020, when YES Bank underwent a reconstruction led by the Reserve Bank of India (RBI). At that time, the bank was grappling with substantial bad loans, governance issues, and severe financial distress. As part of this reconstruction, YES Bank proceeded to write down the entire outstanding value of its AT1 bonds.
These disputed instruments comprise two issuances:
- ₹3,000 crore, carrying a 9.5% coupon, issued in December 2016.
- ₹5,415 crore, offering 9% interest, issued in October 2017.
Axis Trustee Services, representing the bondholders, challenged this write-down before the Bombay High Court in May 2020. In January 2023, the High Court ruled against the write-down, a decision subsequently upheld by the Supreme Court on October 15, 2026, which dismissed appeals filed by YES Bank, the RBI, and the Union government.
Implications for YES Bank's Capital and Bondholders
The Supreme Court's judgment carries substantial implications for YES Bank's capital adequacy. Following the ruling, the bank disclosed on October 16 that reinstating the AT1 bond principal could reduce its Common Equity Tier-1 (CET1) capital ratio by approximately 250 basis points, based on its financial position as of June 30, 2026. However, the bank projected that its overall Tier-1 capital ratio would remain unchanged at 14% on a pro forma basis, asserting it possesses sufficient capital-management flexibility to implement further measures if necessary.
In the wake of the Supreme Court's decision, Axis Trustee Services demanded the restoration of the bonds and associated rights. On October 28, the trustee issued a notice to YES Bank, requesting the reinstatement of the instruments within three days and warning of potential contempt proceedings for non-compliance. YES Bank responded on October 30, acknowledging the ruling and stating it was evaluating its legal ramifications. The bank also clarified that coupon payments would be governed by the terms outlined in the respective bond information memorandums, including applicable discretion.
What the Review Petition Means
The filing of this review petition under Article 137 of the Constitution introduces another complex legal dimension to the ongoing dispute. Bondholders now await further clarity regarding the reinstatement of their bonds, the status of interest payments, and the ultimate financial impact on YES Bank as the judicial process continues.