MUMBAI: A day after Icra and Care Ratings downgraded upper tier II bonds of Yes Bank to default, the lender said on Wednesday it has adequate liquidity to meet its obligations.
“For Basel II, upper tier II bonds, the specific features of the instrument require debt servicing to be linked to the bank meeting regulatory norms on capital adequacy," Yes Bank said in a regulatory filing on Wednesday.
The bank said in its FY20 financial results announced on 6 May, it had declared that it did not meet the regulatory capital ratio requirement as on 31 March and therefore its inability to service the coupon is solely a function of that.
“The bank would like to stress that the coupon on these bonds is cumulative in nature and any unpaid sum will become payable once the bank meets minimum regulatory capital ratio subject to the required regulatory approvals," the lender added.
On 20 June, the private sector lender had that the Reserve Bank of India (RBI) has temporarily disallowed it from paying interest on its tier-II bonds, due on 29 June, because of its weak capital position.
Following this, Icra and Care Ratings downgraded the bank's upper tier II bonds to default. Icra, in a statement, said its rating action also takes into account the reported net loss of ₹16,418 crore in FY20 and the CRAR of 8.50%, despite sizeable capital infusion by new shareholders and the write-down of the additional tier I (AT-I) bonds in Q4 FY20.
Under the plan, domestic investors including SBI, Housing Development Finance Corp., ICICI Bank , Kotak Mahindra Bank, Bandhan Bank, Federal Bank and IDFC First Bank invested ₹10,000 crore into Yes Bank. In the rescue process, Yes Bank’s AT1 bonds worth ₹8,415 crore were written down in full in March.
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