PM, FM assure Govt will fully protect all deposits

The All India Bank Employees Association (AIBEA) has threatened to go on strike if the Financial Resolution and Deposit Insurance (FRDI) Bill is not amended to safeguard the interest of depositors, even as the government has assured that it will protect the rights of customers. The AIBEA is of the opinion that the Bill is “wrongly timed” and that it is “unwarranted” in the country. "Our banks deal with huge public money and total deposits in the banks today are more than Rs 106 lakh crore. Unlike the American and other western banks which are run with shareholders and investors' money, banks in India are run with people's hard-earned savings kept as deposits," the All India Bank Employees Association said in a statement earlier this week.

Hence, [the] safety of people's money should be the top priority, it said. The government which brought in the FRDI Bill 2017 with a 'bail-in' clause has created panic amongst the people about the safety of their deposits in banks, it said. "AIBEA has already appeared before the Joint Parliamentary Committee and urged upon them to reject the Bill. It is contemplating a strike action against this unwarranted FRDI Bill, if the Government proceeds further (with the Bill)," it said. The Bill provides for the creation of a new authority, the Financial Resolution Corporation (FRC), which will deal with liquidation and resolution of banks, insurance and other financial institutions. The FRC will have powers to liquidate any bank and permit the use of depositors' money to bail-in a bank. This provision has created doubt and panic in the minds of the public, the statement said. The 'Resolution Corporation', proposed in the draft bill, would look after the process and prevent banks from going bankrupt. Furthermore, the question of a bail-in does not arise in the Indian context as banks under liquidation are general merged with stronger banks, it added. Prime Minister Narendra Modi has said that his government was working to protect the interest of bank customers and their deposits, seeking to dispel rumours regarding the proposed FRDI Bill. Earlier, seeking to allay concerns about the provisions of the draft law, Finance Minister Arun Jaitley said the government will fully protect public deposits in financial institutions, even as he hinted at openness to changes in the proposed FRDI Bill introduced in the Lok Sabha in August. That bill is being scrutinised by a joint committee of the Parliament.