- 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.
