Yes Bank AT1 bondholder case: RBI & SEBI seek time to file response

Mar26,2021 #RBI #SEBI #YES BANK

Aryan Grover

Time has been granted to the Reserve Bank of India (RBI) and market regulator Securities and Exchange Board of India (SEBI) to file a response to the AT1 bondholders, who had filed a petition before the Bombay high court.

The relief demanded in this matter is for Yes Bank to deposit Rs. 160 crores, the amount invested by the petitioners in the AT1 bonds of Yes Bank. The petition implements 16 different parties as respondents, including the RBI, the Union of India, Sebi, Yes Bank, Yes Securities (India), Axis Trustee Services, among others.

It has been alleged by the bondholders that the sale of AT1 bonds to them was illegal since it lured the buyers, mostly senior citizens, to invest their life savings in the bond at the instance of relationship managers of Yes Bank and other private
intermediaries. The managers, in e-mails addressed to the prospective buyers, had said that the bonds would fetch better returns than a fixed deposit and that this investment is a safe one.

The RBI and SEBI have been impleaded in this matter for the reason, as mentioned in the petition, “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.”

Thus, the illegal sale of perpetual subordinated unsecured non-convertible ATL bonds was made in collusion with Yes Bank and other intermediaries.

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