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Yes Bank Ltd has said that the Reserve Bank of India (RBI) turned down its request to pay interest on its tier II bonds due on 29 June. It added that the ‘Reserve Bank of India has expressed its inability to accede to bank’s request for payment of interest dues since the bank does not meet the minimum capital requirements currently.’ In a regulatory filing on 20 June, the bank said in terms of the information memorandum dated 25 June, 2012, the interest due and remaining unpaid shall be accumulated and be paid by the bank later, subject to it complying with regulatory requirement.
‘We refer to our earlier communication dated 27 May, 2020, wherein we had inter alia informed that as the capital to risk assets ratio (CRAR) of the bank is below regulatory requirement, and the bank has filed an application with Reserve Bank of India (RBI) seeking approval for payment of interest due as on 29 June, 2020, for the captioned Upper Tier II bonds,’ the bank said.
Yes Bank’s total capital adequacy ratio stood at 8.5 per cent in the March quarter, of which common equity tier I (CET1) ratio was 6.3 per cent and Tier II ratio was at 2 per cent after a bout of capital infusion from private and public sector lenders.
On 13 March, the government had approved a rescue plan for Yes Bank backed by State Bank of India. Under the plan, domestic investors including SBI, Housing Development Finance Corp, ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank, and IDFC First bank invested Rs 10,000 crore into Yes Bank. In the process, Yes Bank’s AT1 bonds worth Rs 8,415 crore were written down in full in March.
That apart, Yes Bank is also looking to raise up to Rs 10,000 crore to bolster its capital base. It has approval from its board of directors to raise up to Rs 15,000 crore in equity capital. In May, Prashant Kumar, chief executive, Yes Bank, had said that it was looking to raise Rs 10,000-12,000 crore as soon as possible through a follow-on public offer, a rights issue or a qualified institutional placement.
