Nippon Life India Asset Management Company (NIMF) has marked down the value of bonds of Yes Bank to zero and also restricted the subscription limit to Rs 2 lakh per investor in the schemes that have exposure to the private lenders’ bonds.
“Perpetual bonds of Yes Bank Limited in the schemes of NIMF have been marked down to zero. The valuation adjustment reflects the uncertainties around the realisable values but does not in any manner indicate any reduction or write off of amount repayable by Yes Bank Limited or eventually realisable by the schemes holding these instruments,” NIFM said in a note to investors.
Further, the AMC also limited fresh inflows in the scheme to Rs 2 lakh per day per scheme per investor, till further notice.
“This limit is imposed only on the new applications, switch-ins, Systematic transfer plans, systematic investment plans received after the cut off time on March 5, 2020,” the note added.
The move comes after the Reserve Bank of India (RBI) placed the debt-ridden private lender under moratorium on Thursday and limited withdrawals from the bank at Rs 50,000 till April 6.
The central bank also superseded the board of Yes Bank with immediate effect and appointed former SBI chief financial officer Prashant Kumar as administrator for YES Bank.
The State Bank of India has confirmed that its board has granted in-principal approval to explore investment opportunities in Yes Bank.
“The mere imposition of moratorium does not necessarily or automatically lead to erosion of value in our investments in Additional Tier 1 bonds issued by the bank,” NIMF said.
Given the numerous press reports as well as the Press release by SBI, which talks about a potential equity participation into Yes bank, it is apparent that the authorities are seized of the wider implications of continuing with a prolonged period of uncertainty, Nippon AMC added. It also expected clarity to emerge on the same in the immediate future.
As per the Information Memorandum (IM), in case the authorities decide to reconstitute the bank or amalgamate the bank under Section 45 of Banking Resolution act 1949, the bank will be deemed as non-viable or approaching non-viability and the trigger for write down or conversion of the Additional Tier 1 bonds will be activated, it said.
First Published: Mar 6, 2020 11:32 AM IST
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