Yes Bank’s unusual real estate deal with Reliance Infra raises questions over custodial role

An intricate debt-asset swap between Yes Bank and Anil Ambani-led Reliance Infrastructure, or Reliance Infra in March 2021 has drawn scrutiny, with reports suggesting the arrangement allowed RInfra to effectively ring-fence a valuable property through Yes Bank, rather than facilitating a straightforward debt recovery. While widely reported as a debt settlement, a less-publicized option agreement accompanying the deal raised eyebrows regarding its true nature.

According to a report by The Wire, on March 31, 2021, Yes Bank signed an agreement to acquire head office property of Reliance Infra in Mumbai in exchange for settling ₹12 billion (₹1,200 crore) of RInfra’s non-performing loan. The property, encompassing 15,514 square metres of land and a 34,361 square metre building, was valued at approximately ₹11.75 billion, with stamp duty adding ₹350 million, bringing the total to about ₹12.1 billion. This transaction was documented through a registered conveyance/sales deed (BDR 17/4656/2021).

However, the unusual aspect of the deal, as highlighted by The Wire, was a simultaneous, separately registered option agreement (BDR 17/4657/2021) between Reliance Infra and Yes Bank. This agreement granted Reliance Infra the right to buy back the acquired property from Yes Bank at any point within a nine-year period. This deviates significantly from the typical banking practice where assets acquired in debt settlements are usually liquidated promptly to offset bad loans.

Critics, as noted by The Wire, argue that this arrangement allowed RInfra to keep control over a prime real estate asset for up to nine years, effectively shielding it from other creditors, while Yes Bank appeared to function as a custodian. Further concerns were raised by restrictive clauses in the option agreement, which stipulated that the buyback right would be nullified if the control of RInfra changed from the existing promoters or if the option holder ceased to be a wholly-owned subsidiary of RInfra. This suggested a greater interest from RInfra’s promoters in the property’s repurchase than the corporate entity itself, which originally defaulted on the debt.

The unique nature of this option agreement was reportedly not disclosed at the time the debt-asset swap was widely reported, leading to questions about the transparency and genuineness of the sale.

More recently, in June 2025, a separate development saw Reliance Infrastructure’s wholly-owned subsidiary, JR Toll Road Private Ltd (JRTR), fully settle a debt of ₹273 crore (including interest) with Yes Bank. Reliance Infrastructure clarified in regulatory filings that this settlement also discharged its obligations as a corporate guarantor for the loan, and reiterated that Yes Bank holds no shares in Reliance Infrastructure and is neither a related party nor part of the promoter group. This recent settlement addresses a different financial obligation from the 2021 property swap.

The initial property deal, as analyzed by The Wire, continues to be cited as an example of a complex financial arrangement that provided unique flexibility to a debtor while raising questions about the standard recovery practices in the banking sector.

(This summary is based on the article titled “Is Yes Bank Providing Custodial Services to RInfra for Its Valuable Property?” published by The Wire on July 10, 2025. All primary reporting, disclosures, and document references are credited to The Wire.)

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