RBI bars YES Bank from coupon payment on Upper Tier II bonds

by mehekkaoberoi
  • The Reserve Bank of India has restrained private sector lender YES Bank to pay interest (coupon) on the Tier II bonds as its capital adequacy ratio was below regulatory requirements.
  • The private lender had approached banking sector regulator RBI seeking approval to pay interest due as on June 29, 2020 for Upper Tier II Bonds.
  • These Unsecured Non-Convertible Upper Tier II bonds carry coupon of 10.25 per cent.
  • Its overall capital adequacy ratio stood at 8.5 per cent at end of March 2020 with Common Equity tier I (CET I) of 6.3 per cent.
  • Its stock was trading 1.8 per cent lower on BSE.
  • The capital adequacy ratio is below the regulatory requirements.
  • The bank informed exchanges that RBI has expressed its inability to accede to bank’s request for payment of Interest due, since it does not meet the minimum capital requirements currently.
  • Therefore, the bank would be unable to pay Interest or coupon on the said Upper Tier II Bonds.
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