RBI, Sebi seek time to file response in Yes Bank AT1 bondholder case

The Bombay high court has granted time to the Reserve Bank of India (RBI) and market regulator Securities and Exchange Board of India (Sebi) to file responses in a petition filed by individual holders of Yes Bank AT1 bonds.

The bond holders who had approached the court in February claim that the sale of bonds to them was illegal and have asked for Yes Bank to be directed to deposit Rs160 crore in the high court, pending a decision in the case. The Supreme Court had directed the Association to the High Court when approached in October 2020.

RBI, Sebi seek time to file response in Yes Bank AT1 bondholder case

The petitioners in this case had invested about Rs160 crore in AT1 bonds of Yes Bank.

“Some of the respondents including Sebi and RBI sought time to file a reply to our interim relief application. The court has allowed them to file the same and listed the matter next on 26 April,” said Srijan Sinha, an advocate who appeared for AT1 Bondholders Association.

The petition named 16 respondents including, the RBI, the Union of India, Sebi, Yes Bank, Yes Securities (India), Axis Trustee Services, among others.

On 13 March, 2020, the government had approved a rescue plan for Yes Bank backed by the State Bank of India. Under the plan, domestic investors including SBI, Housing Development Finance Corp, ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank and IDFC First bank invested ₹10,000 crore into Yes Bank. In the rescue process, Yes Bank’s AT1 bonds worth Rs8,415 crore were written down in full in March last year.

The petitioners said they were victims of an illegal sale of perpetual subordinated unsecured non-convertible ATl bonds made by the private respondents, in collusion with Yes Bank and other intermediaries.

“That such an illegal sale of such AT1 bonds was perpetuated under the eyes of respondent number one (RBI) and respondent number three (Sebi) The regulatory authorities have completely failed in their duty to safeguard small investors, such as the members of the petitioner association, by taking no steps to prevent the sale of such bonds to individual retail investors such as the members of the petitioner association,” the petition said, a copy of which has been reviewed by Mint.

Comprising mostly senior citizens, the petitioners alleged they were lured into investing their life savings, in the bonds, at the insistence of relationship managers of Yes Bank and other private intermediaries. In some cases. relationship managers of respondent number four (Yes Bank), sent emails to petitioners, saying that AT1 Bonds shall fetch better returns than what a fixed deposit would yield, and that the same is a safe investment.

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