Yes Bank case: Nippon India MF expresses concern over RBI's proposal to write-down perpetual bonds

Nippon India Mutual Fund has termed the RBI's proposal to write-down the perpetual bonds issued by Yes Bank as unprecedented and expressed concerns about its implications on investors.

The fund house, which has an exposure of over Rs 1,800 crore to Yes Bank debt, last week created segregated portfolios in its schemes. This came after the downgrade of debt instruments of Yes Bank to 'D', which is below investment grade, by ratings agency Icra.

Yes Bank was last week put under a moratorium, with the RBI capping deposit withdrawals at Rs 50,000 per account for a month and superseding its board.

As part of the resolution plan, the RBI has proposed that the additional tier-1 bonds or perpetual bonds issued by the bank will be completely and permanently written down.

In a note to investors, Nippon India Mutual Fund said,"We have expressed our concerns to RBI through the discussion forum pointing out the negative implications of the proposal to the financial system and to the various investors."