Monday, July 03, 2017

Financial Resolution and Deposit Insurance (FRDI) Bill

The central government is proposing to introduce the captioned Bill in the Parliament.

Section 49 (1) (f) of the Bill ominously empowers the specified authorities to mandate the following:

"(f) the reduction of interest or rights which the members,
depositors and other creditors have in or against the
covered service provider before its resolution to such
extent as the Corporation and the Appropriate
Regulator considers necessary in the public interest or
in the interests of the members, depositors and other
creditors or for the maintenance of the business of the
covered service provider;"

For the first time, the government has chosen to sow seeds of suspicion in the minds of depositors of both private and public sectors that their deposits may not be repaid fully. Similarly, those who have taken insurance with LIC need to reappraise their insurance strategy.

Politicians collude with businesspeople and bankers. Huge bad debts are generated. Ultimately depositors pay the price. How fair is this?

1 comment:

akji said...

It appears that the govt is forcing us to take out the deposits from Bank. But what the poor depositors will go.