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Informist, Wednesday, May 20, 2026

 

NEW DELHI – The Supreme Court Wednesday asked the Ministry of Finance to give details of the Cabinet resolution or meeting and related documents where the decision to write off YES Bank Ltd.'s additional tier-1 bonds worth INR 84.15 billion was taken. Solicitor General of India Tushar Mehta, appearing for the finance ministry, has to produce the minutes of the Cabinet decision by 1500 IST, said the top court.

 

The top court asked Mehta to give full disclosure of rules of the Cabinet meeting, its quorum and who were members present in the meeting who took the decision. The bench of Justice Dipankar Datta and Justice Augustine George Masih questioned Mehta whether there was any immunity that the apex court cannot see the file on write-off. "Satisfy our conscience. Tell us if there was a proper cabinet meeting. If not, then you will invite an order from us. We are keeping it open. You are the second senior most law officer of the court, you will advise your client properly whether you would like an order from the court or would like to withdraw your appeal," said the top court. 

 

In March 2020, YES Bank had written off additional tier-1 bonds worth 84.15 bln rupees as part of a reconstruction scheme. Subsequently, the bank's additional tier-1 retail bondholders moved to the Bombay High Court to challenge the decision and get their money back. The high court in 2023 had set aside YES Bank's decision to write off additional tier-1 bonds worth 84 bln rupees.  

 

Thereafter, YES Bank, the government, and the Reserve Bank of India moved the apex court challenging the high court ruling. The high court order, if implemented, shall result in deleterious consequences for the banking system and the future resolution of any bank facing a similar level of stress, said the government in the petition. The high court ought to have appreciated that the implications of their order are far-reaching, said the government. In the future, given such a precedent, it is likely that no potential investor would come forward to support bailing out a crippled bank, the government added.

 

Additional tier-1 bonds are a type of perpetual bonds that do not have any fixed maturity but offer relatively higher rates as these are considered quasi-equity instruments with a larger risk of investment.

 

In February, the top court had reserved its order after hearing all the parties. However, later the top court recalled its order and asked the government to reply to queries on decisions to write off YES Bank's additional tier-1 bonds.

 

At 1330 IST, shares of YES Bank traded 1.4% lower at INR 21.67 on the National Stock Exchange.  End 

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripahti

Edited by Akul Nishant Akhoury

 

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