Retail investors in Yes Bank’s AT1 bonds reach out to RBI

March 10, 2020 3:40 AM

Investors said they had invested their savings in AT1 bonds with the intention to earn fixed returns safely, retail bondholders told RBI in an email.

Mumbai resident Archana Khetan, whose husband Mahesh, invested Rs 50 lakh in five Yes Bank AT1 bonds, told FE that they had put entire savings in bonds on the advice of Yes Bank relationship manager in Andheri branch. (File image)Mumbai resident Archana Khetan, whose husband Mahesh, invested Rs 50 lakh in five Yes Bank AT1 bonds, told FE that they had put entire savings in bonds on the advice of Yes Bank relationship manager in Andheri branch. (File image)

By Ankur Mishra

Retail bondholders of Yes Bank’s AT1 bonds have reached out to the Reserve Bank of India (RBI) to get back their principal amount invested at least in the bonds and complained of mis-selling by the branches of Yes Bank, after the regulator proposed to write down the investment in AT1 bonds in its draft reconstruction plan.
FE has learned that around 70 retail bondholders have written to the regulator on their investment in AT1 bonds of Yes Bank.

In a draft reconstruction plan for reviving Yes Bank, RBI on Friday said, “The instruments qualifying as additional Tier 1 capital, issued by the Yes Bank under Basel III framework, shall stand written down permanently, in full, with effect from the appointed date.”

Investors said they had invested their savings in AT1 bonds with the intention to earn fixed returns safely, retail bondholders told RBI in an email. The investment was based on the premise that their investments would be safe in India’s fourth largest private sector bank and not subject to the risk and vagaries of equity markets, the email further said. Retail bondholders requested that RBI, the ministry of finance and other authorities in charge of the resolution process should ensure that at least the principal amounts of AT-1 bond holders be returned even if they have to be restructured and paid over the next 3-5 years.

Mumbai resident Archana Khetan, whose husband Mahesh, invested Rs 50 lakh in five Yes Bank AT1 bonds, told FE that they had put entire savings in bonds on the advice of Yes Bank relationship manager in Andheri branch. Similarly, New Delhi-based Saurabh Mehta, son of retail bondholder Harish Mehta, who invested around Rs 1.5 crore in AT1 bonds said, “We want our investment back. It was mis-selling of AT1 bonds as a safe investment by the relationship manager of Yes Bank.”

Similarly, Madhu Patni’s son Chirag said FE a relationship manager of Yes Bank advised them that their `70 lakh invested in fixed deposit to be trasferred to AT1 bonds. Baldev Arora, who is a shopkeeper in Kolkata, also invested up to Rs 20 lakh in two Yes Bank AT1 bonds on the advice of a Yes Bank employee.

Nimish Goyal, a Chandigargh resident, told FE that his mother Prabha was advised by a Yes Bank relationship manager to shift her retirement funds into AT1 bonds. “Her retirement fund of Rs 10 lakh is zero due to mis-selling,” Goyal said.

The retail bond holders wrote in the email to RBI that it was disheartening for them to see their investment being written down. Many of the bondholders include octogenarians, retired army personnel, teachers and retirees, who were not expecting to lose their savings.

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