Yes Bank debenture trustee moves high court on RBI move to write-down

Axis Trustee Services Limited, a debenture trustee of Yes Bank, has moved the Bombay high court (HC), against the proposal by the Reserve Bank of India (RBI) to

Axis Trustee Services Limited, a debenture trustee of Yes Bank, has moved the Bombay high court (HC), against the proposal by the Reserve Bank of India (RBI) to write down additional tier-1 (AT-1) bonds.

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The RBI proposal is aimed at rescuing Yes Bank which has been put on a moratorium since Thursday. The proposal is part of a draft restructuring package wherein ₹8,400 crore outstanding to AT-1 bondholders are to be written down. While mentioning the plea, senior counsel Janak Dwarkadas informed a division bench of justice KK Tated and justice Sarang Kotwal that Axis was serving as a liaison between the debenture holders and Yes Bank that had issued the debentures. It was collecting interest payments on behalf of the bond holders. When the RBI issued the proposal on March 6 calling for objections till March 9, they had no option but to approach the HC.

Dwarkadas submitted the bond holders were apprehensive that the RBI may issue a notification on Tuesday confirming the proposal and hence sought interim relief against the same as its effect would be irreversible.

After mentioning the petition which is expected to be heard on Wednesday by the same bench, the trustees wrote a letter to the RBI and the government which stated, “In view of the fact that the matter is sub-judice, you (Government and RBI) are requested not to precipitate any action to the prejudice of the AT-1 bondholders.” On Thursday (March 5), the RBI had taken over the board of Yes Bank and had put it under a moratorium for a month, with ₹50,000-cap on withdrawals. On March 6, it came out with the proposal to write down the bonds and liabilities of the bank to rescue it.