The Conviction And The Caution

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YES Bank Lost 14.5% in One Session: What Does the Supreme Court’s ₹8,415 Crore AT1 Ruling Change?

Quick take: A Supreme Court ruling on October 15 turned a closed chapter of the 2020 YES Bank rescue into a live liability. The stock lost 14.53% on the NSE in a single session, and it was still sliding the next morning.

What happened

A bench of Justices Dipankar Datta and Augustine George Masih upheld the Bombay High Court’s January 2023 decision that set aside the write-off of YES Bank’s Additional Tier-1 (AT1) bonds. Those bonds, worth ₹8,415 crore (₹3,000 crore raised in December 2016 and ₹5,415 crore in October 2017), were reduced to zero under the March 2020 reconstruction scheme. The ruling went against the positions of the RBI and the Central Government, both of which had contested the High Court verdict. Reports say the bank must honour the bonds at coupons of 9.5% and 9%, though the timing and mechanics will depend on how the ruling is implemented.

The numbers

  • NSE data for October 15: YES Bank opened at ₹21.25, hit a low of ₹16.96, and closed at ₹18.12, down 14.53% from ₹21.20. Volume was roughly 668 million shares.
  • On October 16, Business Standard’s live blog showed the stock down about another 3% in early trade, and about 16.7% lower over two sessions.
  • Kotak Mutual Fund suspended fresh lump-sum investments, switch-ins and new SIP/STP registrations in its Medium Term Fund and Credit Risk Fund as a precaution. Both held YES Bank AT1 bonds that had been valued at zero. Existing SIPs and STPs continue.

Why it matters

For bondholders, the ruling revives a claim that had been treated as worthless for over six years. For shareholders, the concern is capital: reinstating or compensating AT1 holders could weigh on capital adequacy. Reports note that Japan’s SMBC, which holds close to 25% of the bank, has not been reported to have assessed the potential impact. YES Bank has not been quoted in the coverage reviewed, though Business Standard says it is exploring all legal options. There is also a wider question for debt funds: how AT1 write-offs are priced when courts can later reverse them.

The wider tape

The broader market was mixed early on October 16. The Nifty 50 hovered around the 23,000 mark, with Nifty IT up about 1.8% at 9:32 AM and Tech Mahindra up over 3% after its Q2 results. The rupee opened at 94.72 per dollar against 95.05 the previous day. YES Bank’s slide came largely from stock-specific news rather than a market-wide move.

What to watch next

  • Any formal statement from YES Bank on repayment, capital impact or a review petition.
  • Whether other mutual funds with AT1 exposure follow Kotak with restrictions.
  • Any RBI or government response, given both lost the case.
  • Delivery volumes and whether selling pressure persists after the first two sessions.

Sources: The Tribune; Outlook Money; Outlook Business; Business Standard live blog; NSE bhavcopy data (October 15, 2026).

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Disclaimer: This post is for educational and informational purposes only and is not investment advice. Consult a SEBI-registered advisor before investing.

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