Yes Bank AT1 bond verdict impact: ₹8,415 crore back on the books, ₹5,217 crore pro forma loss

Short answer: the Supreme Court has put ₹8,415 crore of AT-1 bonds back on Yes Bank's books. The bank hasn't booked the hit yet, but by its own numbers it would turn a ₹1,080 crore Q2 profit into a ₹5,217 crore loss and cut its core capital ratio (CET-1) from 13.7% to 11.4%. For shareholders, the main question now is whether Yes Bank needs to raise fresh capital. For the bondholders, it's a win after six years.

What the Supreme Court decided

In March 2020, when the RBI took over a failing Yes Bank and an SBI-led group rescued it, the RBI-appointed administrator wrote the bank's AT-1 bonds down to zero. Bondholders, who argued the bonds had been mis-sold to them, went to court. The Bombay High Court quashed the write-down on 20 January 2023.

On 15 October 2026, a bench of Justices Dipankar Datta and Augustine George Masih dismissed the appeals filed by Yes Bank, the RBI and the Union of India. According to Yes Bank's filing, the court ordered that:

• the appeals are dismissed and any interim order stands vacated;
• annual coupon payments are unaffected and must be made as per the bonds' Information Memoranda;
• each side bears its own costs.

The reasoning, from the judgment: the final reconstruction scheme notified on 13 March 2020 had dropped the write-down clause that was in the draft, so the administrator no longer had the power to write the bonds down after the bank was reconstructed. "A power not specifically conferred cannot be implicitly vested through a general, omnibus savings clause," the court said.

Yes Bank AT1 bond verdict impact, in numbers

Yes Bank has put out its own estimates in two filings, on 16 and 17 October.

The bank says these pro forma figures are indicative and unaudited and may change after "consequential actions, further legal assessment and final accounting and regulatory treatment". Business Standard reports the half-year pro forma loss would be ₹4,146 crore. In its 16 October filing, Yes Bank put the CET-1 hit at about 250 basis points, with its Tier-1 ratio staying at 14.0%, since AT-1 bonds count towards Tier-1 capital.

For scale: CNBC-TV18 notes ₹8,415 crore is more than double Yes Bank's full-year net profit for FY26 (₹3,476 crore).

What brokerages are saying

• Citi kept its Sell rating and cut its target to ₹17.50 from ₹22. It estimates a 250 bps CET-1 hit to 11.5% (principal only, assuming coupons are discretionary and non-cumulative), a 13–14% hit to book value, and a likely need to raise capital.
• Morgan Stanley kept Underweight with a ₹17 target. It puts the post-tax amount at about ₹6,300 crore, around 12% of net worth, or roughly a 190 bps CET-1 hit, and is watching for a review petition (IANS).

What it means for you

If you hold Yes Bank shares: the risk flagged by both the bank and the brokerages is dilution. If Yes Bank raises equity to rebuild its capital buffer, existing holders own a smaller slice. The bank says it "has access to appropriate capital-management levers", but hasn't announced a raise. CNBC-TV18 reports Yes Bank had 56.68 lakh retail shareholders at the end of September, owning 18.23%.

If you hold the AT-1 bonds: the bonds are reinstated, and the court said annual coupons must be paid as per their terms. Mint reports the status of coupons due since 2020 wasn't immediately clear, and Yes Bank is still evaluating "available legal remedies", so wait for the bank's next disclosure before assuming any payout date.

If you're a depositor: nothing in the ruling touches deposits. The dispute is about the bank's capital ratio. Yes Bank reported deposits of ₹3,54,004 crore for Q2, up 19.5% year on year.

1. 2016–2017

   Yes Bank raises ₹8,415 crore through AT-1 bonds (coupons of about 9% and 9.5%, per CNBC-TV18)

2. March 2020

   RBI takes control of Yes Bank; SBI-led rescue; administrator writes down the AT-1 bonds

3. 20 Jan 2023

   Bombay High Court quashes the write-down

4. 15 Oct 2026

   Supreme Court upholds the High Court order; shares close 14.5% lower at ₹18.12

5. 16 Oct 2026

   Yes Bank discloses ~250 bps CET-1 impact; Citi and Morgan Stanley stay negative

6. 17 Oct 2026

   Q2 FY27 results: ₹1,080 crore profit as reported, ₹5,217 crore loss pro forma

7. 19 Oct 2026

   Investor/analyst call on Q2 results; markets reopen

What to watch next

Markets reopen on Monday, 19 October, the same day Yes Bank holds its Q2 investor and analyst call. The things to look for: whether the bank files a review petition, how it plans to account for the ₹8,415 crore, what it says about past coupons, and whether it announces a capital raise. We'll update this page when it files anything new. Nothing here is a recommendation to buy or sell.