Yes Bank shares fell to a day low of Rs 16.96 on Thursday after the Supreme Court ruled against the bank in its Rs 8,415 crore AT1 bond case.

The court dismissed appeals from Yes Bank, the Reserve Bank of India and the Centre. A bench of Justices Dipankar Datta and Augustine George Masih upheld a January 2023 Bombay High Court order that had cancelled the bond write-off.

‘We see no reason to interfere with the impugned judgment,’ the bench said. AT1 bonds, short for Additional Tier-1, are risky bonds that banks sell to build up their core capital.

They have no maturity date. Investors accept that the bank can wipe them out if it gets into deep trouble. That is what happened in March 2020, when Yes Bank was rescued.

The bank’s administrator wrote the bonds down to zero on 14 March, a day after the bank was reconstructed.

Bondholders argued that the final rescue scheme had dropped the clause allowing a write-down, so the administrator had no power to act.

The High Court agreed, and now the Supreme Court has too. What happens next with the money is unclear. Sources reported that repayment and any interest depend on the full judgment.

Yes Bank had said earlier that any liability from the verdict would be recorded in a future reporting period, and that it did not expect a material financial impact, according to the same report.

The Centre told the court that roughly Rs 1 lakh crore of AT1 bonds sit with Indian banks. It warned that an adverse ruling could shake investor confidence in them.

The NSE event calendar lists a Yes Bank board meeting on 17 October to consider financial results.

Yes Bank shares closed at Rs 18.12 on NSE on Thursday, down by 14.53% from Wednesday’s close of Rs 21.20.

The stock opened at Rs 21.25 and touched a high of Rs 21.38. The day’s low of Rs 16.96 is also a new 52-week low.

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