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

BENGALURU, Oct 22 (Reuters) - Nippon Life India Asset Management (NIPF.NS), opens new tab 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), opens new tab 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