Nippon Life India AMC Secures Regulatory Approval to Settle Yes Bank Bond Case for Rs 96.76 Crore

MUMBAI — Nippon Life India Asset Management announced on Thursday that it has received in-principle approval from India’s markets regulator to settle a long-standing dispute over alleged fraudulent investments in Yes Bank additional tier-1 (AT-1) bonds. The settlement involves a payment of Rs 96.76 crore ($10.2 million).

The asset manager, which operates as a unit of Japanese insurer Nippon Life Insurance, stated that it paid the settlement charges during the September quarter. However, the firm is currently awaiting a formal settlement order from the regulator.

The regulatory proceedings stemmed from allegations that between 2016 and 2019, Reliance Mutual Fund—which is now known as Nippon Life India Mutual Fund—invested Rs 2,150 crore in Yes Bank’s AT-1 bonds. According to the regulator, these investments were made in exchange for loans extended to companies backed by industrialist Anil Ambani. Anil Ambani later sold Reliance Mutual Fund to Nippon Life in October 2019.

The value of Reliance Mutual Fund’s investment in the AT-1 bonds was entirely wiped out when Yes Bank was declared insolvent in 2020. The broader regulatory landscape surrounding these instruments shifted recently when India’s Supreme Court set aside Yes Bank’s write-off of Rs 8,400 crore in AT-1 bonds earlier this month. While that ruling dealt a blow to the lender and offered relief to bondholders, Nippon Life AMC clarified that any money recovered following the court ruling will be passed directly to investors in the relevant mutual fund schemes and will not impact the company’s financial results.

The one-time settlement charge had a measurable impact on the asset manager’s financial performance for the September quarter. Nippon Life AMC reported a nearly 6 percent fall in net profit to Rs 324 crore.

Despite the settlement costs, the company reported positive growth in other operational metrics. Its quarterly average assets under management rose by 20 percent to Rs 7.87 lakh crore during the quarter, supported by steady inflows from domestic retail investors. Additionally, the firm’s operating profit registered a 25 percent increase, reaching Rs 523 crore.

"Regulatory settlements of this scale require careful financial planning, as seen with the direct impact on Nippon Life AMC's quarterly net profit. For asset management companies and financial institutions, resolving legacy disputes is a critical step to clear regulatory overhang, even when it involves substantial one-time costs. At the same time, the steady growth in average assets under management and operating profit demonstrates underlying business resilience supported by retail inflows." — Dr. Shishir Gupta, Founder & CEO, StartupLanes