Yes Bank Responds to ATSL Notice Over AT-1 Bond Re-instatement Following Supreme Court Judgment

Yes Bank has announced that it remains fully committed to acting in accordance with applicable law and a recent Supreme Court judgment. The ruling upheld a January 2023 Bombay High Court judgment that re-instated Additional Tier-I (AT-1) bonds previously written down by the bank's administrator in March 2020.

The bank's response follows a letter and notice issued by Axis Trustee Services Ltd (ATSL), acting as the trustee for the AT-1 bonds, on October 28, 2026. ATSL called upon Yes Bank to re-instate the AT-1 bonds, which aggregate ₹8,415 crore, and complete all necessary corporate actions within a three-day timeline.

In its communication, ATSL warned that failure to execute these steps within the specified period would force it to initiate contempt proceedings before the Supreme Court against the bank, its directors, and officers. The trustee cited wilful disobedience of the Supreme Court judgment as the grounds for potential legal action.

According to its regulatory filing, Yes Bank acknowledged that it is cognizant of the matter and is conducting a detailed examination of the Supreme Court judgment and its implications. The bank stated that it will take all steps and measures necessary and permissible under applicable law.

Yes Bank firmly rejected ATSL's characterization of its conduct as wilful disobedience, describing the assertions in the trustee's letter as baseless and without merit. The bank emphasized that its ongoing evaluation of the situation is directed toward full compliance with the Supreme Court judgment.

Addressing concerns raised by the Yes Bank AT-1 Bond Holders’ Association regarding unpaid coupons—specifically for two series with coupon rates of 9 percent and 9.50 percent—ATSL clarified that its notice seeks the re-instatement and activation of the bonds in the bank's books and its register of debenture holders or beneficial owners.

Additionally, ATSL's notice requires Yes Bank to execute requisite corporate actions with depositories NSDL and CDSL to reactivate the two bond series. This includes reversing all entries, write-offs, and cancellations stemming from the initial decision, as well as coordinating with the BSE and NSE to restore the bonds on their respective trading platforms and resume trading activities.

"This development highlights the complex legal and regulatory challenges that financial institutions face when legacy decisions are overturned by higher judicial authorities. For the banking sector, managing compliance with court-mandated re-instatements of capital instruments like AT-1 bonds requires careful coordination with trustees, depositories, and regulators. Clear communication and adherence to statutory timelines will be critical for Yes Bank as it navigates these legal proceedings and addresses stakeholder expectations." — Dr. Shishir Gupta, Founder & CEO, StartupLanes