Tuesday, 12 December, 2017

Government Committed to Protecting Rights of Depositors: Arun Jaitley

Preparing For Cyprus Moment Centre May Allow Banks To Use Your Hard Earned Deposits In Case It Collapses FDRI Bill won't hurt small depositors, says Arun Jaitley
Patty Aguilar | 07 December, 2017, 23:46

This Finance Ministry statement comes in the backdrop of fears that the "bail in" provisions in the FRDI Bill could get extended to bank deposits, putting the depositors interests into risk. The finance minister on his Twitter wrote that the certain misgivings have expressed in the media regarding bail in the provision. The Ministry of finance also added that in India all the step and policy measures are taken to prevent the protection of interests of depositors and the failure of the banks such as capital adequacy and prudential norms. For several years now, there have been demands to increase the Rs 1 lakh amount with stakeholders citing this as too low for someone who might be depositing his entire life's savings in the bank. The government said FRDI bill is more friendly to depositors than other jurisdictions which provide the statutory bail-in.

In case for banks, the ministry stated that they have adequate capital and are also under prudent regulation and supervision to ensure safety and soundness, as well as systemic stability. The existing laws ensure integrity, security and safety of the banking system. The petition was started by a Mumbai-based individual, Shilpa Shree, with a single signature and has got over 40,000 signups within 24 hours, supporting her appeal to Finance Minister Arun Jaitley to not let this bill pass with the "bail-in' provision". The bill seeks to deal with insolvency of financial service providers.

Currently, the FRDI Bill is before a Joint Committee of Parliament and this Panel's report would be again considered by the Union Cabinet before moving the amendments if any to the Bill in Parliament. Also it will cancel the DICGC Act to transfer the deposit insurance powers and responsibilities to the Resolution Corporation. But, not too many would agree with this argument unless the Bill itself undergoes a change with respect to the two controversial provisions.

The bill is scheduled to be debated in the winter session of Parliament.

The statement issued by North Block claimed, "At present, each depositor can be only protected up to a limit of Rs 1 lakh by the guarantee of the Deposit Insurance and Credit Guarantee Corporation".

Economic Affairs Secretary SC Garg, too has spoken to allay the concerns of depositors saying principal guarantee for PSU bank depositors come from the government ownership and there is no reason to worry.

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