Yes Bank AT1 Coupon, October 24, 2026: Bank Keeps Its Discretion Open on the 9% Bonds

The Yes Bank AT1 coupon question now has a partial answer, and it isn’t the one bondholders wanted to hear. In a filing to NSE and BSE on October 24, 2026, Yes Bank said it retains the right to exercise coupon discretion on its Additional Tier-1 (AT1) bonds, and that it hasn’t yet decided whether it will use that right. The coupon on its 9% AT1 bonds fell due on October 18, 2026.

What Yes Bank told the exchanges about the AT1 coupon

The October 24 disclosure, signed by company secretary Sanjay Abhyankar, makes four points:

• The bank is still examining the Supreme Court judgment on its AT1 bonds and evaluating “all available options” and the steps it could take next. It had disclosed the verdict to both exchanges on October 15 and 16, and on the BSE debt segment on October 18.
• Under the terms set out in the bonds’ information memoranda, the bank retains the right to exercise coupon discretion.
• Some bondholders have been writing in to ask about their coupon payments. For the 9% AT1 bonds issued under an information memorandum dated October 17, 2017, the coupon payment date was October 18, 2026.
• Because its evaluation isn’t complete, the bank will communicate its decision, if any, on whether coupon discretion needs to be exercised only after the assessment is done. It expects that “in due course” and gave no date.

The bank added that day-to-day operations and customer services continue normally across branches and digital channels.

How we got here

A quick recap. On October 15, the Supreme Court upheld the Bombay High Court’s decision to set aside the 2020 write-down of Yes Bank’s AT1 bonds, and dismissed the appeals filed by the bank, the RBI and the Government of India. We covered the ruling in our piece on the Yes Bank AT1 bonds Supreme Court verdict.

According to Moody’s rating release, which Yes Bank filed on October 20, the court reinstated the bonds because the proper legal process for the write-down wasn’t followed. It didn’t question whether AT1 bonds can absorb losses when a bank reaches the point of non-viability. Moody’s added that it was unclear whether the bank would consider further legal options. The bank’s new letter keeps that door open too, with its line about “all available options”.

The capital cost of the ruling is already on the table. Management estimates, as quoted by Moody’s, that the bank’s CET1 ratio (common equity as a share of risk-weighted assets) will fall to 11.4% from 13.7% on a pro-forma basis as of September 2026. The Tier 1 ratio stays unchanged, since the revived bonds count as regulatory capital. Moody’s also flagged a one-time hit to profitability, and said it expects the bank to raise fresh equity. It affirmed the bank’s Ba1 deposit ratings anyway, as we noted in our Yes Bank Moody’s rating story.

Reading the Yes Bank AT1 coupon line carefully

The wording matters. The bank isn’t saying it will skip the payment. It’s saying the bond terms give it the right to decide, and that it hasn’t decided yet. For holders who expected money on October 18, that’s an uncomfortable wait with no end date.

What to watch next

We see three things worth tracking. First, the bank’s decision on the October 18 coupon, which it has promised to disclose once its review ends. Second, whether it pursues any further legal step against the judgment. Third, the equity raise Moody’s expects, since that is how the bank would rebuild the CET1 cushion the ruling has thinned.

For shareholders, the bigger story is capital, not this one payment. On management’s own estimate the CET1 ratio drops by 2.3 percentage points, so the price and timing of any equity raise will matter more to the stock.

Disclaimer: This article is for information and education only and is not investment advice. Please do your own research or consult a SEBI-registered adviser before making any investment decision.