YES to skip interest on tier-II bonds

MUMBAI: Private sector lender YES Bank Ltd said the Reserve Bank of India (RBI) has temporarily disallowed it from paying interest on its tier-II bonds due on June 29, due to its weak capital position.

In a regulatory filing on June 20, the bank said that in terms of the information memorandum dated June 25, 2012, the interest due and remaining unpaid amount shall be accumulated and be paid by the bank later, subject to compliance with regulatory requirements.

“We refer to our earlier communication dated May 27, 2020 wherein we had inter alia informed that as the capital to risk assets ratio (CRAR) of the bank is below regulatory requirement, and the bank has filed an application with Reserve Bank of India (RBI) seeking approval for payment of interest due as on June 29, 2020, for the captioned Upper Tier II bonds,” the bank said.

YES Bank’s total capital adequacy ratio stood at 8.5% in the

March quarter, of which common equity tier I (CET1) ratio was at 6.3% and Tier II ratio was at 2%, after a bout of capital infusion from private and public sector lenders.

The bank added that the “Reserve Bank of India has expressed its inability to accede to bank’s request for payment of interest due since the bank does not meet the minimum capital requirements currently”.

On March 13, the government had approved a rescue plan for YES Bank backed by State Bank of India.