Picture of contradictory decisions being made with regard to private banks in India

Mumbai, Ta. March 16, 2020, Thursday

The decision to right-down Yes Bank's Additional Tier 4 Bonds appears to be contradictory decisions for public sector banks and private banks in India, said rating agency Standard & Poor's.

This decision will hurt asset managers and increase the cost of raising the capital of issuing equipment.

According to the relief plan announced by the government for Yes Bank, the bank's remaining Rs 5 crore AT-1 bonds are currently conditioned to be written down.

Investors in AT-8 bonds want their bonds to be converted into equities. He has filed a petition in this regard.

Under the Basel-2 framework, AT-4 equipment has been designed as a means of loss-taking. In case of financial stress, the holders of this equipment may not be able to get their money back. India's rules state that a bank has to bear the burden of such equipment when a bank is under stress.

The Reserve Bank's decision to permanently write down Yes Bank's AT-4 bonds remains to be harmed by such instruments in the private sector banks, but has come to the conclusion that this standard does not apply to public sector banks, the agency added. In the case of such instruments, the Reserve Bank does not seem to want to have a parity between the private sector banks and the public sector banks.