Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Industry / Banking/  Day after bonds were downgraded, Yes Bank says it has enough liquidity
BackBack

Day after bonds were downgraded, Yes Bank says it has enough liquidity

In the rescue process, Yes Bank’s AT1 bonds worth ₹8,415 crore were written down in full in March
  • On 13 March, the government had approved a rescue plan for Yes Bank backed by the State Bank of India
  • The Reserve Bank of India has temporarily disallowed Yes Bank from paying interest on its tier-II bonds due on 29 June because of its weak capital position. (Mint)Premium
    The Reserve Bank of India has temporarily disallowed Yes Bank from paying interest on its tier-II bonds due on 29 June because of its weak capital position. (Mint)

    Yes Bank has adequate liquidity to meet all its obligations, the private lender said on Wednesday, a day after Icra and Care Ratings downgraded the upper tier-II bonds of Yes Bank to default.

    “For Basel II, upper tier-II bonds, the specific features of the instrument require debt servicing to be linked to the bank meeting regulatory norms on capital adequacy," Yes Bank said in a regulatory filing.

    The bank said that in its FY20 financial results announced on 6 May, it had declared that it did not meet the regulatory capital ratio requirement as on 31 March and, therefore, its inability to service the coupon is solely a function of that.

    “The bank would like to stress that the coupon on these bonds is cumulative in nature and any unpaid sum will become payable once the bank meets minimum regulatory capital ratio subject to the required regulatory approvals," the bank said.

    The Reserve Bank of India (RBI) has temporarily disallowed it from paying interest on its tier-II bonds due on 29 June because of its weak capital position, the private sector lender said on 20 June.

    Following this, Icra and Care Ratings downgraded the bank’s upper tier-II bonds to default.

    Icra said that its rating action also takes into account the reported net loss of 16,418 crore in FY2020 and the capital-to-risk weighted assets ratio (CRAR) of 8.50%, despite the sizeable capital infusion by new shareholders and the writedown of the additional tier I (AT-I) bonds in Q4 FY20.

    On 13 March, the government had approved a rescue plan for Yes Bank backed by the State Bank of India (SBI).

    Under the plan, domestic investors including State Bank of India, Housing Development Finance Corp. (HDFC), 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 8,415 crore were written down in full in March.

    Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

    ABOUT THE AUTHOR
    Shayan Ghosh
    Shayan Ghosh is a national editor at Mint reporting on traditional banks and shadow banks. He has over 12 years of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
    Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
    More Less
    Published: 25 Jun 2020, 07:26 AM IST
    Next Story footLogo
    Recommended For You
    Banking Stocks
    ₹1,053.6-0.5%
    ₹1,440.70.52%
    ₹1,0841.08%
    ₹122.751.3%
    ₹734.052.53%
    Switch to the Mint app for fast and personalized news - Get App