L&T opposes Bombay HC over RBI decision to invalidate additional Tier 1 bonds

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Larsen and Toubro have challenged the Bombay High Court against the decision of the Reserve Bank of India to invalidate the additional level 1 obligation of the YES bank in crisis in accordance with a new proposed reconstruction plan. L & T’s petition for brief under the Banking Regulation Act comes after Axis Trustee Services Limited (ATSL), the largest bondholder, already approached the High Court against the RBI …

Larsen and Toubro have challenged the Bombay High Court against the decision of the Reserve Bank of India to invalidate the additional level 1 obligation of the YES bank in crisis in accordance with a new proposed reconstruction plan.

L & T’s Briefing Under the Banking Regulation Act comes after Axis Trustee Services Limited (ATSL), the largest bondholder, already approached the High Court against RBI’s plan to quash the bonds. AT-1 bonds. Although the case was raised before the judges of Judge KK Tated and Judge SV Kotwal and was heard on Wednesday, Axis Trustee Services has agreed to start negotiations with the central bank.

As per RBI’s plan, a proposal was made to write off YES Bank’s AT-1 bonds which were in circulation until March 5.

Senior lawyer Janak Dwarkadas, briefed by Manilal Kher Ambalal and Co., appeared for ATSL and raised the case on Monday, which was heard yesterday. In the hand-delivered notice sent to the RBI, YES Bank and Government Advocacy, ATSL expressed concern that the RBI could proceed with the notification of the said plan without hearing them.

According to the ATSL petition, some of the holders of AT-1 are Nippon Mutual Fund, Reliance Nippon Life Insurance, UTI Mutual Fund and Franklin Mutual Fund.

The petition states-

“The exercise of powers under Section 45 (4) (a) of the Banking Regulation Act 1949 in the facts of this case is wholly unreasonable, arbitrary and disproportionate. It is nothing. other than discrimination between 51% of shareholders and holders of AT1 bonds. which clearly violates Article 14, 19 (1) (g) as well as the constitutional rights under Article 300A of the Constitution of India. ”

On the other hand, the L&T petition will be raised in front of the same bench Thursday at 4 p.m. and should be associated with the ATSL petition, which is due to be heard tomorrow. The contingency fund for L&T agents and supervisory staff is also one of the applicants.

More than Rs. 8,000 crore is invested in YES Bank AT-1 bonds by mutual funds, provident funds, insurance companies, retail investors etc. According to reports, L&T has an exposure of Rs. 100 crore to AT-1 bonds from YES Bank, while the contingency fund of L&T agents and supervisory staff has an exposure of Rs. 25 crore of exposure to bonds. .


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