…..Therefore the FRDI Bill should be opposed ! - The Fearless Indian
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…..Therefore the FRDI Bill should be opposed !

  • Mrinalini Singh
  • January 15, 2018
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Surely the Central government is not boorish, as to not realize the Panacea for the epidemic increasing Number of NPA. Instead of attacking the Corporate NPAs and planning strategies of recovery, the Government is planning to invade the savings of the depositors through the introduction of the FRDI Bill. The Finance Ministry is adopting the irrational policy of “Robbing Peter to pay Paul”

 The current topic across the country, churning the lives of the commoners is the pep talk of the Introduction of the Financial Resolution and Deposit Insurance Bill 2017 (FRDI). This Bill is nothing but the corrosion of the hard-earned deposits of the commoners. This exhibits the muscle power of the politicians/ proven majority in the Lok Sabha, nobody other than those elected by we people for a better future- a live illustration of betrayal!

The so-called Bail-in clause has also been commented upon by experts as being potentially harmful to deposits held in savings accounts. On this, the Finance Minister has commented under: “the provisions contained in the FRDI Bill, as introduced in the Parliament, do not modify present protections to the depositors adversely at all. They provide additional protections to the depositors in a more transparent manner.”

This statement came in the backdrop of media reports about an online petition against the proposed bill on Change.org that got more than 40,000 signatures in 24 hours. Over 100,520 people have signed the petition so far. The fear of the Bank customers stems from the bill’s bail-in clause which empowers the resolution corporation to rescue a failing financial institution through the help of creditors and depositors money. Bail-in is, however, one of the many options to rescue a financial institution on the brink of failure.

We need to educate the depositors that Barring money which is insured, rest of the money can be subjected to a bail-in clause. However, bail-in can be invoked only if you had given prior consent at the time of signing the deposit forms. Even today, only a small amount of Rs 1 lakh of bank deposits are insured in case of a bank going bankrupt.
The issue of rising Bad loans of Public Sector Banks and a few Private Banks is gushing for the past more than a decade. But there has been no attempt made by the previous party in power nor does it occur to the wisdom of the current ruling party to get to the root cause of the issue and resolve the same.

The slogan of Swatch Bharat Mission- A clean image, Clean administration, Clean India ! is just an eye-wash. It is nothing but a clear indication of protecting the Big Corporate Defaulters by “cleaning the savings” of the commoners. It is obvious that the calculations of both parties in assessing appropriate solution bearing in mind to keep both the Corporates and the Banks unscathed are conflicting.

The FRDI Bill is going to give the Government right to utilize the funds of the commoners without his concurrence.A careful reading of the sentences in clauses 29 and 48 gives the inference that in the event of liquidation of a bank the corporation will decide in consultation with the regulators (i.e., RBI in this case) a specified amount that is to be paid to the depositors. However, the clause bail-in provides the corporation the options of canceling the liability of the bank to the depositors, reducing the liability by a haircut or issuing a bond or any other form of an instrument where the dues will be paid on a future date.

This clause has created ripples since the depositors will have to bear the brunt in the event of liquidation of a bank when the realizable value of the total assets are not adequate to cover the total deposit liabilities. In case any Bank goes into liquidation, to save this bank, the customers will have to sacrifice some amount of their hard earned savings and this fund will be used for raising the capital of this Bank, and that too without his concurrence. The FRDI Bill is silent on effervescent issues like Recovery of Bad Loans, Reduction in NPA Accounts, raising of Bank’s Capital. On the contrary, the Bill should have included provisions of recovering Bad debts on priority, due to which the Banks have become Weak banks.

In the sub-continent like India, taking a decision of crores of deposits of the commoners and utilizing the same, shall be one of its kind, a biggest Money Embezzlement decision of the Century. Whilst, improving the Indian Economy, rising the geopolitical status of the country, facing global development challenges, is necessary for the overall development of the country. Increasing supplies of financial capital, expanding technological prowess to Businesses- Small and Big is also necessary to march ahead on the Path of Progress– but at what cost – at the cost of putting the Bank depositors’ interests into jeopardy. How can this be justified?

In dismay, the commoners have already started frantically withdrawing their cash from Banks. Besides the general Public, the Retirees in their declining years are fearful of the safety of their hard-earned/saved resources essential for their livelihood and also their health treatment, is becoming a burning Issue.

The plight of the General Public is like being out of the frying pan into the fire. If they withdraw the money and keep at home- there is fear of the thieves if kept in the Bank- fear of the Government. Many households are run on the interest earned on the deposits – saved as their lives’ fortunes.

It is observed that for genuine requirements of a commoner, after thinking several times and exhausting his own resources, he approaches the bank for a small loan. He keeps aside his needs and repays the loan through installment, first thing from his salary. He spends sleepless nights in the thought of repaying the entire loan as early as possible, so as to attain Moksha or emancipation and get himself free from entanglement into re-birth to repay the loan he had taken. Despite, in case there is default in repayment of any of the installments, Banks do not leave any stone unturned legally to harm his prestige.

Why doesn’t the Bank Management fall in line with the same treatment to Big Corporate Willful defaulters? Why are criminal cases not filed against these defaulters? A timely decision of the Bank Management could have surely helped in the preventing these elevated Bad loans. Diverting the deposits of the General Public for financing this willful defaulter is nothing but Misuse of power exhibited by the CMD/ED/CEO of the Public Sector Banks. Till such time the accountability of such CMD/ED/CEOs is not legally finalized, the NPAs will keep on increasing.

In case the repayment is not being made in these Big Accounts, why is the RBI or the Government not holding the CMD/ED/CEO responsible? This clearly indicates the hidden motives of sanctioning these Big Loans. Resultantly, in the interest of the Politicians, in the post-Independent period, the ruling Government is planning to introduce this Bill of FRDI.

In the past, on several occasions, attempts have been made by the INBEF (Aff. to INTUC) carrying out countrywide movements in various cities/states including the capital city to bring awareness about the Central Bank of India defaulters by conducting Dharna/Morcha. THE FIGHT AGAINST NPA WILL CONTINUE!

At present, the Bill is forwarded to the Parliamentary Committee for examination. Therefore, the danger of this Bill is not yet evicted- it still is hanging. In the event of the customer withdrawing his deposits due to fear psychosis, the efforts of the Bank officials to bring business through loans shall come to a standstill, thereby losing the trust of the customers. A run on the Bank shall be a bigger reason than the NPA reason for a bank to go into liquidation. Folks, with a vision to avoid the negative long-term effect on Banks, Bank staff, the general public and in general on the economic stability of the country, the FRDI Bill should be protested.

All are requested to actively participate in the movement of protesting the FRDI Bill and stop the attack on the safety of our life’s hard earned resources. Only then will our future be safe and the Politicians covering up the Big Bad Defaulters will be made answerable.

Come one come all! Protest the FRDI Bill! Educate the customers/ general public as well to protest the FRDI Bill! Remember always that the Fortune favors the Bold!

This article was written by Shri Subhash S.Sawant, General Secretary, Indian National Bank Employees Federation (INBEF).

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