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FRDI BILL

FRDI BIll wIthDRawn FRom going bust. At present,
taxpayers do such “bail-
paRlIament unDeR pRessuRe outs”. Let’s maintain the
status quo if the govern-
ment believes that there is
no fundamental difference
The withdrawn of Financial Resolution and Deposit Insurance between the present and
Bill, 2017, from the Parliament is indeed a retreat for the the proposed law. Public
trust is the very basis of any
depositors as the security of their funds parked in the banks government that comes
was at question, writes Sarrah to power and it has done
well to retreat that now.
fter much hue It is the moral duty of any eyes of the government. As That banks, by the very
and cry by the government at the centre such when the proposed nature of their business,
opposition to ensure that rightful legislation came into public are essentially dependent
over “bail-in” savings of citizens are fully domain, there was all- on the funds deposited by
A clause in the protected in case a bank round criticism. The politi- the depositors but the later
legislation, the govern- goes down under bank- cal class too raised its guns can’t be used to function
ment, on August 7, finally ruptcy. Secured creditors, against the government. like guinea pigs to offset
decided to withdraw the who lend money against The government has the losses suffered by some
controversial Financial collaterals, easily get their done well to nip the evil unscrupulous bankers.
Resolution and Deposit money back in case of a in the bud now and has So when a depositor fears
Insurance Bill (FRDI), 2017, default or when an entity withdrawn the proposed that his or her hard-earned
from the Parliament. De- goes bankrupt. But, mil- legislation — the Financial funds parked in a bank
positors were worried that lions of savings accounts Resolution and Deposit may be at risk from a law
a proposed law would force holders who deposited Insurance (FRDI) Bill — to that allows these financial
them to lose their lifetime their lifetime savings in fully protect the public’s institutions to offset the
savings if their banks turn banks without any collater- deposits in banks and loses, the depositors would
insolvent or bankrupt. al were naturally aggrieved financial institutions. The feel panicked. And this is
The government had and concerned about their dangerous point of the pro- what exactly happened in
an obligation to allay such lifetime savings. They do posed legislation was the this case.
fears but it acted only when so because they have trust “bail-in” clause, whereby, Union Minister Piyush
the frenzy against the leg- in the robustness of Indian depositors’ money could Goyal has apprised the
islation reached the streets. banks under the watchful be used to salvage a bank joint parliamentary com-
mittee that a “resolution of
these issues would require
a comprehensive examina-
tion and reconsideration”,
and that therefore the
government deemed it
“appropriate” that the Bill
be withdrawn. Idea is to
ensure that such legisla-
tion is not attempted in the
future by the government.
We need a robust banking
system and any measure
that strengthens confi-
dence in institutions like
the Reserve Bank of India
and public and private
sector banks should be a
matter to gloat over and
laud the government.
• Ensuring insurance At present, deposit insurance is available for all deposits of up to `1 lakh letters@tehelka.com

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