The Reserve Bank of India has restrained private sector lender YES Bank to pay interest (coupon) on the Tier II bonds as its capital adequacy ratio was below regulatory requirements.
The private lender had approached banking sector regulator RBI seeking approval to pay interest due as on June 29, 2020 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 end of March 2020 with Common Equity tier I (CET I) of 6.3 per cent. Its stock was trading 1.8 per cent lower on BSE. The capital adequacy ratio is below the regulatory requirements.
The bank informed exchanges that RBI has expressed its inability to accede to bank’s request for payment of Interest due, since it does not meet the minimum capital requirements currently. Therefore, the bank would be unable to pay Interest or coupon on the said Upper Tier II Bonds.
ALSO READ: YES Bank board may take a call on Monday to raise Rs 10,000 cr via FPO
The Interest amount due and remaining unpaid shall be accumulated and be paid later, subject to Bank complying with the stipulated regulatory requirement, it added.
Bank has plans for raising equity capital to enhance capital adequacy ratio, support growth and create buffers for Covid-19. Its shareholders' have approved proposal for an aggregate capital raise of up to Rs 15,000 crore.
This capital raising from markets would be further aided by sources of organic capital (internal generation). It plans to do so by resolution of Stressed asset resolution and asset sell-down.
The deferred tax asset of Rs 6,118 crore deducted from net-worth for computing CET 1, representing about 2.55 per cent in CET 1 could potentially available to the bank over time, according to Bank presentation.
The private lender had approached banking sector regulator RBI seeking approval to pay interest due as on June 29, 2020 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 end of March 2020 with Common Equity tier I (CET I) of 6.3 per cent. Its stock was trading 1.8 per cent lower on BSE. The capital adequacy ratio is below the regulatory requirements.
The bank informed exchanges that RBI has expressed its inability to accede to bank’s request for payment of Interest due, since it does not meet the minimum capital requirements currently. Therefore, the bank would be unable to pay Interest or coupon on the said Upper Tier II Bonds.
ALSO READ: YES Bank board may take a call on Monday to raise Rs 10,000 cr via FPO
The Interest amount due and remaining unpaid shall be accumulated and be paid later, subject to Bank complying with the stipulated regulatory requirement, it added.
Bank has plans for raising equity capital to enhance capital adequacy ratio, support growth and create buffers for Covid-19. Its shareholders' have approved proposal for an aggregate capital raise of up to Rs 15,000 crore.
This capital raising from markets would be further aided by sources of organic capital (internal generation). It plans to do so by resolution of Stressed asset resolution and asset sell-down.
The deferred tax asset of Rs 6,118 crore deducted from net-worth for computing CET 1, representing about 2.55 per cent in CET 1 could potentially available to the bank over time, according to Bank presentation.
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