YES Bank won’t pay interest on tier-ii bonds due on Jun 29
This, after RBI declines permission on payment of interest
The Reserve Bank of India (RBI) has restrained YES Bank from paying interest (coupon) on upper tier-ii bonds as its capital adequacy ratio is below regulatory requirements, the private sector lender has informed the BSE.
The bank had approached the RBI seeking approval to paying interest due as of June 29 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 the end of March, below the regulatory requirements of 11.5 per cent, with common equity tier-i (CET-I) of 6.3 per cent. Its stock on Monday closed 0.9 per cent lower at ~27.75 per share on the BSE.
The interest amount due and the remaining unpaid shall be accumulated and be paid later, subject to the bank complying with the stipulated regulatory requirement, the lender said. The bank’s shareholders on Monday approved raising capital of up to ~15,000 crore to enhance capital adequacy ratio, support growth and create buffers for Covid-19.
This fundraising from markets would further be aided by sources of organic capital (internal generation). The bank plans to do so by resolution of stressed asset resolution and asset sell-down.
The deferred tax asset of ~6,118 crore deducted from net-worth for computing CET1, representing about 2.55 per cent in CET-1, could potentially be available to the bank over time, according to bank presentation.