Important StoriesMutual funds suspend bulk subscriptions to gold ETFs ahead of festival seasonChina considers new export curbs on solar, AI, biotechAir India extends cancellation of Saudi Arabia flights till Oct 20Reliance hits back at Musk, says Jio’s satellite services also await clearancesIndia-US trade pact would be concluded at earliest, in interest of global trade: FMFollow UsFOLLOW US ON WHATSAPPHomeGO BACK TO HOME THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. Yes Bank’s CET1 ratio to take 250-basis-point hit after AT1 bond ruling The bank is examining legal options after the ruling, while S&P expects adequate capitalisation despite potential earnings pressure from coupon payments By BL Mumbai Bureau Updated - October 16, 2026 at 07:07 PM.×ShareWhatsAppXFacebookLinkedInMessengerRedditMailhttps://www.thehindubusinessline.com/money-and-banking/yes-banks-cet1-ratio-to-take-250-basis-point-hit-after-at1-bond-ruling/article71592712.eceCopy Yes Bank expects its CET1 ratio to take a 250-basis-point hit following the Supreme Court ruling on the write-down of ₹8,415 crore in AT1 bonds.

Following the Supreme Court upholding the 2023 Bombay High Court judgment quashing the write-down of Additional Tier (AT)-1 Bonds aggregating ₹8,415 crore by Yes Bank, the Bank said the pro forma impact of reinstatement of these Bonds’ principal amount on Common Equity Tier (CET) 1 Ratio (including profits) as on June 30, 2026 is expected to be 250 basis points.

However, the Tier-1 Ratio on a pro forma basis will remain unchanged at 14 per cent.

In a regulatory filing, the Bank said it is examining the Supreme Court judgment in detail, including evaluating all available legal options and suitable actions/steps going forward.

Yes Bank emphasised that it has access to appropriate capital-management levers and can undertake additional capital actions, as it deems appropriate, to pursue its growth objectives.

S&P Global Ratings assessed that Yes Bank‘s credit profile can withstand the Supreme Court of India’s ruling that the write-off of its additional Tier 1 (AT1) bonds was illegal.

The agency underscored that Yes Bank’s regulatory capital is adequate. As of the end of March 2026, the bank’s CET1 ratio stood at a healthy 13.87%, providing a significant cushion. It said. This will allow the bank to absorb an anticipated 250 basis-point impact on its CET1 while remaining well above the minimum regulatory requirement of 5.5%

“In our view, this ruling relates to procedures that Yes Bank did not follow under the reconstruction scheme exercised during the 2020 rescue. The Supreme Court decision is seen as addressing the procedural lapses in the write-down process rather than questioning the instrument’s fundamental loss-absorbing characteristics,” the rating agency said.

S&P noted that “it is unclear whether Yes Bank will challenge the ruling, however, if enforced, we do not expect it to affect our ratings on the bank.”

Under the Basel III framework, AT1 instruments are specifically designed to absorb losses through either conversion into common equity or a write-down mechanism once a pre-specified trigger point is met.

In India, this trigger typically occurs when the common equity Tier 1 (CET1) ratio falls below 6.125% of risk-weighted assets, or when regulators determine the issuer is no longer viable.

S&P expects Yes Bank to remain adequately capitalised, with its risk-adjusted capital (RAC) ratio projected to stay within the 8.0%-8.5% range through the fiscal years ending March 31, 2027 and 2028, compared with 9.0% as of March 2026.

“We do not anticipate any meaningful impact on our total adjusted capital (the numerator for our RAC ratio calculation). We expect the negative impact of approximately Indian rupee (INR) 84 billion (Rs 8,400 crore) to common equity to be largely offset by the reinstatement of the AT1 instruments to a similar extent. Going forward, we see this as earnings negative as the AT1’s has high coupon payments of 9.0%-9.5%,” the agency said.

The Supreme Court order states that the coupon rate will remain unaffected by the outcome of the appeals and must be made in terms of the information memoranda.

“Like other AT1s, Yes Bank’s AT1 also allows for discretionary coupon payments; however, it is unclear if the bank will pay coupons for the 5.5-year intervening period. We note that Dhanalaxmi Bank Ltd. was permitted to defer coupon payments on its Basel II-compliant Tier II instruments, demonstrating the loss-absorption potential of such hybrid debt.

“We currently do not expect material impact of this on the bank’s credit profile but will continue to monitor any related developments. Yes Bank last paid a dividend on its common equity in 2019,” S&P said.

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