SC Asks Finance Ministry to Produce Cabinet Documents on Yes Bank's AT-1 Bond Write-Off

The Supreme Court on Wednesday turned the heat on the Finance Ministry over one of Indian banking's most contested decisions, asking it to produce Cabinet documents that led to the write-off of Yes Bank's additional tier-1 (AT-1) bonds worth ₹8,415 crore in 2020.

A bench led by Justice Dipankar Datta directed Solicitor General Tushar Mehta, appearing for the Finance Ministry, to submit the Cabinet resolution, minutes of the meeting, details of the quorum, and names of members present at the meeting, all by 3 PM the same day, the Economic Times reported.

"Satisfy our conscience. Tell us if there was a proper Cabinet meeting. If not, then you will invite an order from us," Justice Datta reportedly told Mehta. The judge also asked pointedly: "Is there any immunity that the court cannot see the file?"

Mehta suggested that he first produce the documents and allow the court to take a view thereafter.

What Happened in 2020

The case goes back to March 5, 2020, when the central government imposed a moratorium on Yes Bank as the private lender was on the brink of collapse. The RBI superseded the bank's board and appointed an administrator. Days later, the government cleared a reconstruction scheme for the bank, under which the court-appointed administrator wrote down two tranches of AT-1 bonds, reducing their combined value of ₹8,415 crore to zero.

Institutional investors including mutual funds such as Reliance Nippon, financial institutions and retail bondholders lost their entire investment in instruments they had held as relatively safe, yield-bearing securities.

Legal Road So Far

Bondholders challenged the write-off across multiple courts. The Bombay High Court ruled in their favour in January 2023, quashing the decision. Yes Bank, the RBI and the Finance Ministry separately moved the Supreme Court against that ruling. The apex court concluded final arguments on February 26 and had reserved its order, making Wednesday's development a significant mid-course intervention.

Yes Bank, for its part, had said any financial liability arising from the final verdict would be recognised in the relevant reporting period, adding that it did not anticipate a material financial impact.

Notably, Yes Bank recently reported a standalone net profit of ₹1,068 crore for the quarter ended March 2026, a 44% jump from the year-ago period. The bank also recorded a return on assets of 1% for the first time since 2020, underlining how far it has come since its near-collapse five years ago. The Supreme Court's final word on the bond write-off, however, remains the last unresolved chapter of that crisis.