India’s Supreme Court on October 15, 2026, upheld a Bombay High Court decision setting aside the permanent write-down of Yes Bank bonds worth ₹8,415 crore. The court dismissed appeals by Yes Bank, the Reserve Bank of India and the Union of India.

Key Takeaways

  • The court found that the bank’s administrator acted beyond his authority when he ordered the write-down in March 2020.
  • A final reconstruction scheme omitted a write-down provision that had appeared in the draft.
  • The court also noted that Yes Bank had directly sold the instruments to individual investors contrary to the applicable regulatory framework.

Why the Yes Bank bonds write-down was overturned

The additional tier-one, or AT-1, bonds were issued in two tranches: ₹3,000 crore in December 2016 and ₹5,415 crore in October 2017.

After a moratorium was imposed on Yes Bank on March 5, 2020, the RBI superseded its board and appointed Prashant Kumar as administrator. A draft reconstruction scheme published the following day included a permanent write-down provision, but the final scheme notified on March 13 omitted it. Kumar ordered the write-down on March 14.

The Supreme Court found that the omission was deliberate and that Kumar had mistakenly believed he retained authority to write down the bonds. It held that his action exceeded the powers available under the applicable master circular read with the final scheme.

Court distinguishes bank and regulatory powers

The court distinguished the bank’s contractual trigger from the RBI’s regulatory point-of-non-viability trigger, finding that the administrator could not assume the central bank’s regulatory role.

It described the handling of the matter by the RBI, the administrator and Yes Bank as questionable and said an avoidable risk to investors could have been prevented.

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