Pro­posed Fi­nan­cial Res­o­lu­tion and De­posit In­sur­ance Bill

Alive - - News -

A lot of fire and storm has been kicked by the pro­posed Fi­nan­cial Res­o­lu­tion and De­posit In­sur­ance (FRDI) Bill even be­fore it has been passed by Par­lia­ment leave alone be­ing as­sented by Pres­i­dent. There is a wide­spread per­cep­tion that if a bank fails ev­ery­one will have to sac­ri­fice and this in­cludes the de­pos­i­tors and the part of the money which is not in­sured. It is ar­gued that this Bill can’t be avoided as it is part of the G20 (Group of 20 coun­tries) FSB (Fi­nan­cial Sta­bil­ity Board) re­quire­ment. We all know that In­dia is a mem­ber of the FSB and G20. As a mem­ber, In­dia had ac­cepted that it would work out a res­o­lu­tion pack­age. The whole idea of this pro­posed Bill is that if at any point of time a bank fails then how can they be saved?

To put it bluntly, this pro­posed Bill en­vis­ages that all the cred­i­tors will have to be part of the bail-in pro­vi­sion and de­pos­i­tors are also cred­i­tors. The bail-in pro­vi­sion in this pro­posed Bill is ex­pected to elim­i­nate hair­cut. If the bank sur­vives, then the de­pos­i­tors in­clud­ing the non-in­sured de­posits will get back the money. If it fails then they are bound to lose the money. This is why there is so much of hue and cry over it. Ma­mata Ban­er­jee who is the Chief Min­is­ter of Ben­gal said that, “It is a trav­esty that the Cen­tre as an owner of the na­tion­al­ized banks is now try­ing to re­plen­ish the eroded cap­i­tal of banks by forcibly tak­ing away the small de­pos­i­tors sav­ings in­stead of fac­ing the cri­sis in the bank­ing.

CM of West Ben­gal, Ma­mata Ban­er­jee.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.