Dinesh Kamath's Editorial 'FRDI Bill dropped' that was published in Newsband

FRDI Bill dropped

The government decided to drop the controversial Financial Resolution and Deposit Insurance (FRDI) Bill, thus allowing bank customers to breathe easy. This means the present system of insurance deposits will continue and customers will not have to worry about the ‘bail-in’ provision in the proposed Bill.

There were two controversial clauses in the Bill: a bail-in provision and an insurance on deposits. The bail-in provision stipulated that if a bank fails, depositors will have to bear part of the liability. Technically speaking, this provision says, “It amounts to liabilities’ holders bearing a part of the cost of resolution by reduction in their claims.” it angered depositors and invited criticism from opposition parties.

Currently, deposits are insured up to ₹1 lakh. The Bill proposed to delete the legal provision for the present insurance system and defined this protection in a new way. It also said that under the provisions of the FRDI Bill, in case of liquidation of a bank, the claims of uninsured depositors will be higher than those of unsecured creditors and government dues. Therefore, “the rights of uninsured depositors will be better protected... in the FRDI Bill.” However, the perception was that there would not be any insurance cover, which prompted the opposition attack.

In case of problem in the banks, the losses have to be borne by all parliamentarians, and legislators because they run the Government and they are benefited in every sense and more than that they came to power to serve the people and let them pay all the dues to the banks and serve the people. People know that they have enough money inside and outside and if they pay proportionately, they will still have enough money to spend for next election.

The Deposit insurance cap of 1 lakh is too little. So, the Government must come forward to hike it for deposits up to 10 lakhs immediately.

Sometimes even the elected governments act like dictatorial governments at times and so such public outcry and loud protests are needed to tame such bullying governments. People have to bear this in mind whenever any government acts against the interests of the people who elected such a government. It is a victory for the outcry which has sensitized the government. The Deposit insurance cap of 1 lakh is too little, archaic, and insignificant and so the government must come forward to hike it to the deposits up to 10 lakhs immediately. The members of the opposition parties have the responsibility of raising the issue in both houses of the Parliament as the banking system of India travels towards a deep erosion due to the mounting NPA. Will any member raise this issue in the Parliament?