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YES Bank has approached the Supreme Court to challenge the Bombay High Court’s January 20 order quashing the write-off of the additional tier-1 (AT-1) bonds, a report by BQ Prime said quoting two people aware of the developments. The bank has said that its administrator had the power to write off these bonds worth Rs 8,415 crore.
On January 20, the Bombay High Court quashed YES Bank’s decision to write off AT-1 bonds in March 2020.
“The final scheme sanctioned by the Central government did not contain the clause or provision for writing down AT-1 bonds,” the court had said.
The court had further held when the RBI prepared the draft scheme for the reconstitution of the bank, it had invited suggestions and objections, and it appears the petitioners had raised objections to the writing down of AT-1 bonds and even suggested their conversion into shares.
“It appears that upon consideration of the objections, the Reserve Bank made modifications in the draft scheme. It deleted the clause of writing down AT-1 bonds,” the HC said.
“The Administrator could not have taken such a policy decision of writing down the AT-1 bonds. Nor the RBI had authorized him to do so. The Final Reconstruction Scheme also did not authorize the Administrator to write off the AT-1 bonds. It appears the Administrator exceeded his powers and authority in writing off AT-1 bonds after the bank was reconstructed on March 13, 2020,” it added.
However, the court did not go into the merits of the bonds and ruled that there were procedural lapses in the decision to write them down.
A day later, the bank’s chief executive officer, Prashant Kumar, said it had “strong” legal grounds to appeal against a court order.
“The judgment in itself is not questioning the regulatory guidelines in terms of writing off (AT-1 bonds). I think there are questions in terms of the process,” Kumar said.
“We have strong legal advise and opinions which interpret the issue in a different way and that makes a strong ground for us to appeal in the Supreme Court,” he added.
(With agency inputs)
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