Axis Trustee threatens Yes Bank with contempt over AT-1 bonds

Axis Trustee Services Limited warned Yes Bank that it would initiate contempt proceedings before the Supreme Court of India if the lender fails to reinstate ₹8,415 crore worth of Additional Tier-1 bonds within three days.

The trustee accused the private sector lender of wilful disobedience regarding a Supreme Court judgment delivered on October 15, 2026. That ruling upheld a previous Bombay High Court decision setting aside the March 2020 write-off of the bonds. According to Axis Trustee, the bank was required to reinstate the bonds in its records, reactivate the relevant ISINs through depositories, and facilitate their restoration on stock exchanges.

The legal dispute traces back to March 2020, when a government-appointed administrator wrote down the AT1 bonds as part of a rescue package for Yes Bank. Axis Trustee challenged that decision, arguing the administrator exceeded regulatory authority. The Bombay High Court quashed the write-off in January 2023, setting the stage for subsequent appeals that culminated in the October 15 Supreme Court dismissal of petitions filed by Yes Bank, the Reserve Bank of India, and the Union government.

Yes Bank Rejects Allegations of Wilful Disobedience

Responding to the three-day ultimatum, Yes Bank rejected the accusations of non-compliance. In a communication to stock exchanges late on Friday evening, the lender stated that it was examining the judgment and its implications in detail.

“The Bank does not accept the characterisation in your Letter of its conduct as wilful disobedience and the assertions in your Letter are baseless and without merit,” Yes Bank told the trustee. The bank added that it remains fully committed to acting in accordance with the ruling and applicable law, and that it would take all necessary steps permissible under the legal framework.

The coupon payment date for the bank’s 9 percent AT-1 bonds issued in 2017 fell on October 18, 2026. The Supreme Court noted in its ruling that annual coupon payments must remain unaffected and should proceed according to information memoranda, leaving commercial law attorneys and banking regulators to untangle the operational hurdles of compliance.

Trustee Ultimatum Sets Personal Liability Risks for Officers

Axis Trustee made clear that inaction would carry severe personal consequences for the bank’s leadership. The warning issued to Yes Bank explicitly targeted the institution alongside its directors and officers responsible for regulatory compliance.

“Should the Bank fail to comply with the said judgment as called upon above within the stipulated period, we shall be constrained to initiate proceedings for contempt before the Hon’ble Supreme Court of India, against the Bank and its directors and officers responsible for compliance with the said judgment, without any further notice, entirely at the Bank’s risk as to costs and consequences,” the trustee stated in its communication.