INSTITUTIONS MAY USE PUBLIC SAVINGS TO BAIL THEM OUT
Nantoo Banerjee
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2017-12-11 12:53
The Financial Resolution and Deposit Insurance Bill 2017, or FRDI Bill, which is expected to be moved during the short forthcoming winter session of Parliament, has rightly created a serious concern among all sections of depositors with banks and financial institutions as it seeks to dilute the security of deposits in case of institutional failure. Although the government, under growing public pressure, tried to defend the provisions of FRDI Bill, last week, saying the proposed legislation is aimed at protecting the interest of depositors, few are really willing to buy such an assurance. There are several issues. One of them is the ‘bail-in’ provision in the new bill, which seeks to allow a government entity to use depositors' money to save a financial institution on the verge of bankruptcy. An online petition against the Bill by a Mumbai-based lady, Shilpa Shree, has got some 40,000 sign-ups within 24 hours, supporting her appeal to Union Finance Minister Arun Jaitley to not let this Bill pass with the provision. The finance minister responded quickly in a twit saying: “The objective of the government is to fully protect the interest of the financial institutions and the depositors. The government stands committed to this objective.”