One of the biggest losers in case the RBI’s restructuring scheme for Yes Bank goes through will be the additional tier-I bond holders, who have bets totalling Rs 10,800 crore on the lender.
The investors in such instruments typically include mutual fund houses and bank treasuries, experts said.
On Friday, Nippon India Mutual Fund said it has marked down the value of its investments to zero in bonds issued by Yes Bank. While there are no precise estimates of how much of these bonds have been issued by Yes Bank, estimates put it at Rs 8,000-11,000 crore.
“The instruments qualifying as additional Tier 1 capital, issued by Yes Bank under the Basel III framework, shall stand written down permanently, in full, with effect from the appointed date,” the RBI said in a draft on Friday.
While a business news channel reported that some of the unhappy bond holders may approach the court next week, some others feel that the RBI is within its rights to do so.
“This is the first time in the history of Indian banks that tier-I bonds are being written down... the investors have to take a hit on both principal and the balance interest payments,” said Acuite Ratings president Suman Chowdhury.