The clamour against the proposed Financial Resolution and Deposit Insurance (FRDI) Bill has gotten louder, if possible, with the All India Bank Employees Association (AIBEA), one of the biggest unions in the banking sector, entering the stage. The union has announced that it is contemplating a strike action if the government proceeds further on the proposed legislation.
According to AIBEA, at a time when people are already worried about their money in the banks due to the huge bad loans and consequent write offs, the government, instead of assuring the people about safety, has chosen to bring this FRDI Bill, which deals with possible liquidation of banks.
"The Bill has created widespread fear, apprehension and panic amongst the depositors that the government is contemplating to liquidate the banks and the deposits of the Banks will not be returned because of the bail-in clause of the Bill," said a statement recently released by the union.
The Bill provides for setting up a new authority Financial Resolution Corporation (FRC), which will deal with liquidation and resolution of Banks Insurance and other financial institutions. "This FRC will supersede the powers of RBI and other agencies dealing with the problem at present.
Deposit Insurance Corporation guarantees deposits up to Rs 1 lakh per customer. This will be closed down and the FRC will decide the amount now," said the statement, adding that, "In addition, the FRC has power to liquidate any bank and permit to use the depositors' money to bail-in a bank." The union claims that the question of bail-in does not arise in Indian situation as banks under liquidation are generally merged with stronger banks.
The FRDI Bill, first introduced in Lok Sabha in August this year, is currently undergoing scrutiny by a joint parliamentary committee. The latter is supposed to submit its report in the upcoming winter session of Parliament beginning December 15.
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