Nippon Life India AMC gets regulatory nod to settle Yes Bank bond case (updated)

Yes Bank

Today 11:41

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BENGALURU, Oct 22 (Reuters) - Nippon Life India Asset Management NIPF.NS said on Thursday it has received in-principle approval from India's markets regulator to settle a dispute over alleged fraudulent investments in Yes Bank YESB.NS additional tier-1 bonds after paying 967.6 million rupees ($10.2 million).
The asset manager, a unit of Japanese insurer Nippon Life Insurance, said it had paid the settlement charges during the September quarter, but was awaiting a formal settlement order.
India's markets regulator had alleged that between 2016 and 2019 Reliance Mutual Fund, now known as Nippon Life India Mutual Fund, invested 21.5 billion rupees in Yes Bank's AT-1 bonds in return for industrialist Anil Ambani-backed companies receiving loans. 
Anil ​Ambani, the younger brother of billionaire Mukesh Ambani, sold Reliance Mutual Fund to Nippon Life in October 2019.
Reliance Mutual Fund's investment in AT-1 bonds became worthless after Yes Bank was declared insolvent in 2020. 
Incidentally, earlier this month, India's Supreme Court set aside Yes Bank's write-off of 84 billion rupees in AT-1 bonds, dealing a blow to the lender but providing relief to bondholders.
Nippon Life AMC said any money recovered following the court ruling would go to investors in the relevant mutual fund schemes and would not affect the company's financial results.
The one-time settlement charge weighed on the asset manager's September-quarter earnings, with net profit falling nearly 6% to 3.24 billion rupees.
Nippon Life AMC's quarterly average assets under management rose 20% to 7.87 trillion rupees during the quarter, driven by continued inflows from domestic retail investors. Its operating profit rose 25% to 5.23 billion rupees.

 



($1 = 94.8950 Indian rupees)

 (Reporting by Nishit Navin in Bengaluru; Editing by Sonia Cheema and Mrigank Dhaniwala)
 ((Nishit.Navin@thomsonreuters.com;))