YES Bank has filed a review petition before the Supreme Court of India challenging its October 15, 2026, judgment that overturned the bank’s ₹8,415 crore Additional Tier-1 (AT-1) bond write-off. The lender confirmed the development in a regulatory filing on November 13, seeking reconsideration of the ruling that restored bondholders’ legal claims over securities written down during the bank’s 2020 reconstruction.
The move reopens a major dispute involving YES Bank, bondholders, the Reserve Bank of India (RBI) and the legal framework governing bank rescues. The original write-off affected thousands of crores worth of investments and formed part of the lender’s restructuring during a financial crisis. The Supreme Court’s October judgment upheld an earlier Bombay High Court decision, finding that the bank’s administrator did not have the legal authority to write down the bonds after the final reconstruction scheme came into force. The review petition now gives YES Bank another opportunity to challenge that decision.
YES Bank Files Review Petition Under Article 137
YES Bank informed the stock exchanges on November 13 that it had approached the Supreme Court under Article 137 of the Constitution of India.
Article 137 gives the Supreme Court the power to review its own judgments and orders, subject to the applicable rules and procedures.
The petition seeks a review of the court’s October 15, 2026, judgment concerning the write-down of the bank’s AT-1 bonds worth ₹8,415 crore.
In its regulatory disclosure, YES Bank said it would provide further information about material developments as required under stock exchange regulations.
The filing does not disclose the detailed legal grounds on which the bank is seeking a review. It also does not indicate that the Supreme Court has agreed to reopen the case or granted any interim relief.
The petition is therefore a fresh legal step by the bank, not a reversal of the October judgment.
What Happened to YES Bank’s ₹8,415 Crore AT-1 Bonds?
The dispute dates back to March 2020, when YES Bank was facing a severe financial crisis involving mounting bad loans, governance concerns and weakening financial performance.
The RBI placed the lender under a moratorium on March 5, 2020, and subsequently introduced a reconstruction scheme to stabilise the bank and bring in new investors.
As part of the restructuring, YES Bank’s outstanding AT-1 bonds were written down to zero on March 14, 2020. The decision wiped out the investments held by bondholders.
The disputed securities came from two separate issuances:
| Bond issuance | Amount | Annual coupon rate |
|---|---|---|
| December 2016 | ₹3,000 crore | 9.5% |
| October 2017 | ₹5,415 crore | 9% |
| Total | ₹8,415 crore | — |
Axis Trustee Services, representing bondholders, challenged the write-off before the Bombay High Court in May 2020.
The central argument was that the final reconstruction scheme did not contain a provision authorising the administrator to extinguish the AT-1 bonds. The bondholders argued that a provision allowing the write-off had appeared in an earlier draft but was removed from the final scheme approved by the government.
The Bombay High Court accepted the challenge in January 2023 and quashed the write-off.
Why the Supreme Court Overturned the AT-1 Bond Write-Off
YES Bank, the RBI and the Union government challenged the Bombay High Court’s decision before the Supreme Court.
However, on October 15, 2026, a bench comprising Justices Dipankar Datta and Augustine George Masih dismissed their appeals and upheld the High Court’s ruling.
The Supreme Court focused on whether the administrator had the authority to write down the bonds after the final reconstruction scheme became effective on March 13, 2020.
The court concluded that the administrator could not exercise a power specifically assigned to the RBI under the applicable regulatory framework.
It also observed that the final reconstruction scheme had removed the provision expressly authorising the write-down. A general provision preserving existing contracts and instruments could not independently grant the administrator the authority to extinguish the bonds.
The judgment further examined the timing of the action. The court held that the relevant regulatory provisions required the write-down or conversion to take place before the reconstruction scheme came into effect, rather than after its commencement.
The Supreme Court also criticised aspects of the handling of the bank’s financial position and the sale of high-risk AT-1 securities to individual investors.
Importantly, the judgment did not eliminate the loss-absorbing nature of AT-1 instruments. It addressed whether the specific write-off carried out in YES Bank’s reconstruction was legally authorised.
Bondholders Seek Restoration of Their Investments
Following the Supreme Court’s October ruling, Axis Trustee Services sought restoration of the bonds and the rights associated with them.
The trustee also sought restoration of the instruments in relevant depository and exchange records. It indicated that it could pursue contempt proceedings over alleged non-compliance with the court’s judgment.
According to Reuters, Axis Trustee filed a contempt petition shortly before YES Bank announced its review petition. The trustee alleged that the bank had failed to provide a concrete roadmap for restoring the bonds and implementing the judgment.
The dispute has therefore moved beyond the original question of whether the 2020 write-off was valid. It now also involves how the bank should implement the court’s decision and restore the affected bondholders’ rights.
The Supreme Court’s October judgment clarified that annual coupon payments on the bonds would remain unaffected by the outcome of the appeals and should be made in accordance with the relevant information memorandums.
The bank’s review petition introduces another legal development, but it does not automatically suspend the October ruling.
Potential Impact on YES Bank’s Capital Position
The bond dispute has significant implications for YES Bank’s regulatory capital.
The lender had previously indicated that restoring the ₹8,415 crore principal amount could affect its Common Equity Tier-1 (CET1) capital ratio by approximately 250 basis points, based on its June 2026 position.
CET1 capital is a key measure of a bank’s financial strength. It represents the highest-quality capital available to absorb losses and is closely monitored by banking regulators.
A change of this scale could influence how investors assess the bank’s capital buffers, future profitability and ability to support lending growth.
However, the final financial impact will depend on how the restoration is accounted for and implemented under applicable banking and regulatory requirements.
| Issue | Potential implication |
|---|---|
| ₹8,415 crore AT-1 principal | Restoration of bondholders’ rights |
| CET1 capital ratio | YES Bank previously indicated a potential impact of around 250 basis points |
| Annual coupon payments | Governed by the bond information memorandums |
| Legal proceedings | Review petition and bondholder enforcement action |
| Regulatory implications | Possible accounting and capital treatment changes |
The distinction between AT-1 and CET1 capital is important. AT-1 bonds are designed to absorb losses during periods of financial stress, but their treatment depends on the applicable contractual and regulatory conditions. The court’s decision concerned the authority and procedure used in this particular write-off.
What Are AT-1 Bonds and Why Are They Risky?
Additional Tier-1 bonds are a type of regulatory capital instrument issued by banks to strengthen their capital base.
Unlike conventional bonds, AT-1 securities carry specific loss-absorption features. Under certain conditions, they can be written down or converted into equity when a bank faces financial stress or reaches a specified non-viability trigger.
These instruments generally offer higher coupon rates because investors accept greater risk than they would with ordinary bank debt.
The YES Bank dispute highlights why understanding these conditions is important. The Supreme Court did not rule that AT-1 bonds can never be written down. Instead, it found that the specific action taken by the administrator in March 2020 was not supported by the applicable legal authority and reconstruction scheme.
The distinction could have implications for banks, regulators, trustees and investors involved in similar securities.
The Bigger Picture
The YES Bank AT-1 bond dispute is an important test of how India’s banking rescue framework interacts with investor rights and regulatory powers. Financial institutions need mechanisms to absorb losses during a crisis, but those mechanisms must operate within the legal authority established by banking regulations, contractual terms and approved reconstruction schemes.
For investors, the case highlights the risks associated with complex bank capital instruments and the importance of understanding their loss-absorption provisions. For lenders and regulators, it reinforces the need to follow the prescribed legal process when imposing losses on investors during a restructuring.
The review petition also raises questions about how quickly the bank can resolve the outstanding capital and bondholder issues. The outcome could affect investor confidence in YES Bank and influence how market participants evaluate the legal protections attached to AT-1 securities.
Looking Ahead
The Supreme Court will first have to consider YES Bank’s request for review. The November 13 filing does not guarantee that the court will reopen the matter or change its October judgment. Meanwhile, the bank faces continuing pressure to address the restoration demands raised by Axis Trustee Services and clarify the financial and regulatory implications of the ruling.
The eventual outcome will matter to both YES Bank and the wider banking sector. If the October judgment remains in place, the bank will need to address the consequences of restoring bondholders’ rights under the applicable framework. The case will also remain a significant reference point for how AT-1 bond write-downs are carried out during future banking crises.
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