Rs 25 Crore fine imposed on YES BANK in AT1 Bonds misleading Case
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Rs 25 Crore fine imposed on YES BANK in AT1 Bonds misleading Case

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Tushar Mehta

Securities and Exchange board of India (SEBI), imposed a fine of rs 25 Crore on Private Sector bank, YES bank in the additional tier 1 (AT1) misleading case. SEBI has asked the Bank to pay the fine within 45 days of the receipt of the notice.

Besides the bank, senior management and other executives are also fined heavily by SEBI. Vivek Kanwar, Head of YES Bank’s private wealth management team is fined Rs 1 Crore and Ashish Nasa and Jasjit Singh Banga, who were former executives of YES Banks are fined Rs 50 lakhs each.

Super FDs, was the name used by YES Bank, promising higher returns than conventional FD and safety same as a Conventional FD. In reality they were selling AT1 Bonds to investors under the name of super FDs. YES bank which was bailed out with the help of several banks led by SBI Bank in March 2020, wrote off Rs 8415 Crore of AT1 Bonds as per the framework of the YES bank reconstruction scheme.

After all this, investors went to the courts claiming that false promises were made under the light of safe FDs but actually were sold these bonds and need to be compensated by the bank. The case is ongoing in Bombay High Court. Lately, both YES bank and RBI have so far maintained that the AT1 bond write off is as per the base III rules. Institutional investors such as Indiabulls , 63 Moons Technologies have also moved courts, besides the retail investors.

“This is because the reconstruction scheme was formed after the RBI invoked Section 45 of the Banking Regulation Act, 1949, which arises when the bank is deemed to be non-viable or approaching non-viability, enabling the write-down of certain Basel III AT1 Bonds,” Kumar said.

In the replies to SEBI notices, YES Bank denied that it engaged in misselling of AT1 Bonds to investors.

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