‘Drop bail-in clause in financial resolution bill’

BENGALURU:THE Congress on Wednesday urged the Joint Committee on the Financial Resolution and Deposit Insurance Bill, 2017 to drop the bail-In clause in the bill.KPCC Working President Dinesh Gundu Rao said the “Bail-In” clause in the bill will have debilitating impact on people, who have already suffered insurmountable amounts of damage with flawed policy making of the current dispensation.

In a letter to the chairman of the joint committee, Gundu Rao stated that the past couple of years have been difficult for common man, who has faced the brunt and fallout of financial decisions such as demonetisation and the hastily implemented system of GST. “Now, at a time when one would assume that a certain sense of stability would prevail after economic upheaval, certain provisions of the proposed Financial Resolution and Deposit Insurance Bill, 2017 (FRDI Bill) have caused widespread distress and panic ,” he stated.

“The financial institution may reduce their liability to the customer either by refusing to pay back the deposits or interest due, change the term of the deposit by increasing the time period or even lower the rate of interest owed. How just is it to appropriate the assets of the people in such a manner, in order to save institutions which are in pitiable financial shape because of bad banking practices and norms, which had nothing to do with the common man and his deposits?” he asked.

Burgeoning NPA’s (non-performing asset), massive corporate defaults as well as large scale frauds in collusion with bank authorities such as the case of  Punjab National Bank is eroding trust that people placed in these institutions and a “Bail-in” clause in such times of turmoil, will not only erase any trust left in banking institutions, but also inadvertently cause their failure because people will be too afraid to even keep their money in banks, he added.