The Wadhawan family behind Housing Development and Infrastructure Limited (HDIL) and Dewan Housing Finance Limited (DHFL) have been involved in two massive loan fraud cases, which affected customers of Yes Bank, the Punjab and Maharashtra Cooperative Bank, and the Punjab National Bank. Among top bankers, Yes Bank’s co-founder was in cahoots with DHFL’s promoter, and pulled off a Rs 5,000 crore scam that left consumers and investors hanging in the balance. The bank was later reconstituted under the Reserve Bank of India’s watch, but a call taken for the lender’s survival has come back to haunt it.
Investors bear the brunt
As part of the restructuring process, AT-1 bonds issued by Yes Bank were written down, as SBI and other banks infused Rs 10,000 crore to rescue the organisation. But this completely washed away the investment of bond holders, who have been waiting to be compensated ever since. They have finally found relief in a Bombay High Court verdict to reject the write down, and stay the order for six weeks.
What are Yes Bank’s AT-1 bonds?
AT-1 bonds are considered to be high-quality debt instruments, sold to raise money for financing business expansion and new projects. During Rana Kapoor’s reign as Yes Bank CEO, the AT-1 bonds had been sold to investors with the promise of high returns and…
