The Yes Bank AT1 bond case and lessons for all investors — SkimNews
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- Yes Bank had its ₹8,415 crore Additional Tier 1 (AT1) bond issuance fully written off in March 2020, a move later challenged by investors in court.
- Bombay High Court overturned the write-off of Yes Bank’s AT1 bonds, ruling in favor of aggrieved investors who argued the product was mis-sold.
- Supreme Court upheld the Bombay High Court's decision, validating the legal challenge against the write-off but leaving unresolved the issue of pending coupon payments.
- Sebi restricted AT1 bond investments to qualified institutional buyers in October 2020, setting a ₹1 crore minimum lot size to shield retail investors from complex risks.
- Joydeep Sen emphasized that investors must practice 'caveat emptor', scrutinizing risk-return tradeoffs and avoiding products mis-sold as 'safe' or 'FD-like' despite high yields.
Why it matters: Retail investors who lost ₹8,415 crore in Yes Bank AT1 bonds gained legal validation through the Supreme Court’s backing of the write-off reversal, but still face uncertainty over interest recovery. The Sebi-led exclusion of individuals from AT1 markets now stands as a structural safeguard, raising accountability for how high-risk products are sold.
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