The Supreme Court ruled on Thursday that Yes Bank's March 2020 write-off of ₹8,415 crore of Additional Tier 1 (AT-1) bonds was invalid. Every headline is now doing the same arithmetic: what does ₹8,415 crore cost Yes Bank?

The filings suggest that's the wrong question. The instrument at the centre of this case has quietly stopped being a private-bank funding tool. It is now overwhelmingly a PSU bank instrument — and the banks carrying the most AT-1 are the ones nobody is writing about.

The irony: Yes Bank has no AT-1 left

Per Yes Bank's capital adequacy disclosure as at March 31, 2026, the line "Additional Tier 1 capital" reads nil — as it did at March 31, 2025, 2024 and 2023. Its entire Tier 1 capital of ₹45,033 crore is Common Equity Tier 1: a CET 1 ratio of 13.8% on risk-weighted assets of ₹3,26,815 crore.

So the ₹8,415 crore doesn't return into a cushion of perpetual bonds. If restored in full as a liability, it comes out of common equity — about 2.6% of risk-weighted assets on the bank's own numbers, taking CET 1 from 13.8% to roughly 11.2%. Uncomfortable, well clear of the 8% floor, not a solvency event. How much re-qualifies as regulatory AT-1 capital depends on RBI's treatment, which no filing answers yet.

Two things matter more than the number. First, Yes Bank carried no provision at all: because the write-down "was in accordance with the relevant regulations," it "estimated that there should not be any material financial impact of the matter under litigation." That estimate has been overtaken.

Second, when the Bombay High Court ruled the same way in January 2023, an analyst asked then-CEO Prashant Kumar whether the bank would have to redeem. Per the transcript: "the judgment is not talking about any of those things... these are the perpetual bond. And it is not mandatory to exercise that call option." Expect that playbook again: restoration need not mean repayment.

The real exposure sits in PSU capital stacks

Canara Bank is the clearest case. Its Q1 FY27 presentation puts Additional Tier I at ₹17,853 crore as of June 2026 — 2.09% of risk-weighted assets, about 14% of its ₹1,27,932 crore Tier I capital. The churn is the point. Per its 9M FY26 results, Canara "issued Basel III Compliant Tier I Bonds aggregating to ₹3,500 crores" while redeeming ₹2,816.10 crore by exercising call options, including 8.30% perpetual AT-1 issues of ₹1,012 crore and ₹169.10 crore in September 2025. MD & CEO K. Satyanarayana Raju told an earnings call that with CET-1 "very comfortable" the bank needn't raise core capital, "but tier-1 and tier-2 AT1 bonds and tier-2 bonds, the board has already permitted the management to go to the market to the extent of 8,500 crores." Punjab National Bank reports AT-1 of ₹14,090.07 crore at March 31, 2026 against CET 1 of ₹1,25,865.79 crore — roughly a tenth of Tier 1 — with the same roll-and-replace pattern: Series XIX of ₹3,000 crore in September 2023, Series XX of ₹1,153 crore that December, and an earlier ₹3,240 crore raised against ₹1,800 crore called.

Two PSU banks are actively de-risking. State Bank of India holds the largest absolute book — ₹42,208 crore of directly issued qualifying AT-1 instruments in its Basel III template — but its Q3 FY26 presentation shows AT-1 falling from 1.33% of RWA (December 2024) to 1.20% (September 2025) to 1.08% (December 2025), helped by a ₹25,000 crore QIP. Bank of India has cut AT-1 to ₹1,500 crore at March 31, 2026 from ₹2,801.65 crore a year earlier, leaving just 29 basis points between its 15.66% CET 1 and 15.95% Tier 1 ratios: "Bank has exercised Call Option and redeemed AT1 Bond Series VI amounting to ₹750 on Jan 28, 2026."

The insulated list is longer than you'd think

Private banks have already left the instrument behind, one line each. Federal Bank: Additional Tier-1 Capital of 0 at March 31, 2026, Tier-1 and CET 1 ratios identical at 15.93%. IndusInd Bank: nil at March 2026 and 2025, down from ₹1,489.90 crore (March 2023) and ₹2,489.90 crore (March 2022) — run to zero deliberately. RBL Bank: AT-1 "–" against CET 1 of ₹15,754.94 crore in FY26, "Nil" the two prior years. IDFC First Bank: nil across March 2022, 2023 and 2024. Karnataka Bank's CET 1 and Tier 1 are both 18.68%, DCB Bank's both 15.18%, and Tamilnad Mercantile Bank shows 32.27% CET 1 with its "Additional Tier 1 ratio" line a dash.

What the ruling actually changed

Be precise, because the market may not be. Per Yes Bank's own filings, the Madras High Court in September 2020 "upheld the validity of the RBI Master Circular in relation to the AT-1 Bonds" and noted their "loss absorbency feature." Thursday's judgment turns on conduct and process — bonds "actively offered" to individual investors in violation of RBI rules, and a write-down whose execution failed. Loss absorbency hasn't been struck down; exercising it is now fragile if the sequence and the selling were wrong. That is still a repricing, and those who pay for execution risk are the banks that must keep refinancing.

What retail investors should do

Don't trade the Yes Bank headline: management's own transcript says nothing must be repaid immediately, and the regulatory treatment is unresolved. Use instead the one-line test this ruling makes relevant — compare any bank's CET 1 ratio to its Tier 1 ratio in its latest results. Identical, as at Federal, IndusInd, RBL, IDFC First, Karnataka Bank, DCB and TMB, means no AT-1 and no exposure to a higher risk premium on it. A two-point gap, as at Canara Bank and PNB, is perpetual-bond funding that has to be rolled, and a wider spread shows up as interest cost on future issues rather than a headline loss today. Watch the next AT-1 issues from Canara and PNB for the real price of this judgment, and check whether Yes Bank books a provision in its Q2 FY27 results after six years of telling shareholders it didn't need one.

Data sourced from company filings on NSE via Xaro.