A Supreme Court decision on the bonds Yes Bank wrote off during its 2020 rescue could leave the lender noticeably weaker, according to analysts who have run the numbers on what a payout might look like.
The bonds in question, known as AT-1 or additional tier-1 bonds, are a type of debt that banks can cancel in an emergency to protect their capital. When Yes Bank was close to collapse, its bonds worth roughly ₹8,415 crore were wiped out as part of the reconstruction plan. Investors who held them have fought ever since to get their money back. The court’s ruling now raises the chance that the bank will have to compensate them.
If it does, the cost would come straight out of the bank’s own resources. Estimates suggest the book value per share, a measure of what each share is backed by in net assets, could drop by as much as 26%. That is a steep fall for a lender still trying to rebuild trust after years of turmoil.
There is also a worry about the bank’s core capital cushion, measured by the CET1 ratio. This figure shows how much high-quality capital a bank holds compared with its risky assets. A payout of this size would shrink the cushion, leaving less room to absorb future losses and less capacity to lend more. Slower lending would, in turn, make it harder for the bank to grow profits.
Investors have not waited for the final bill. Yes Bank’s share price has fallen sharply since the verdict, reflecting concern that the bank’s balance sheet could be strained just as it was recovering.
Much still depends on how the payout is structured, whether it is spread over time, and how the bank and its regulators respond. For now, the ruling has put a cloud of uncertainty over one of India’s most closely watched turnaround stories.