Kotak suspends inflows into debt schemes after Yes Bank bond ruling

Kotak: Kotak Mahindra Asset Management Company operates mutual funds with a range of debt schemes in India. It holds Yes Bank AT1 bonds in two specific funds that had been valued at zero. The firm suspended fresh subscriptions in those schemes as a precaution following the Supreme Court ruling and is now reviewing the judgment to decide on further actions. Yes Bank: Yes Bank is a private sector bank in India that underwent restructuring in 2020. The Supreme Court overturned the permanent write-off of its additional tier-1 bonds, leaving the bank to assess implications for its obligations. The lender has stated it is examining the final judgment before making further disclosures. Supreme Court: The Supreme Court of India serves as the apex judicial body for the country. It recently upheld the Bombay High Court's 2023 order quashing Yes Bank's write-off of additional tier-1 bonds during the 2020 reconstruction. The bench dismissed appeals from the bank, regulator, and government, affirming the ruling in favor of bondholders. Legal Ruling: The Supreme Court upheld that the administrator lacked authority to write off the bonds under the reconstruction scheme. Fund Management: Kotak suspended subscriptions in two debt schemes to safeguard investors before determining next steps after the bonds were restored.