FRDI: 'Do not panic, your money is safe, stop fear mongering', says Fin Min
Over the past few days, there has been an alarm that has been caused due to the Financial Resolution and Deposit Insurance Bill 2017 (FRDI). It has been said in various quarters that customers will end up losing all their money if a bank fails.
The bill has caused alarm over a bail-in provision which according to many may mean creditors and depositors including common account holders have to absorb losses in case a bank fails.
The Bill was presented in the Lok Sabha in August before it was referred to a joint committee of Parliament. Under the bail-in provision, troubled banks issue ties in lieu of the money deposited.
The Ministry of Finance has repeatedly asked people not to believe such rumours. It has asked people to be beware of fake propaganda. Beware of fear-mongering, the ministry also said. Further, the ministry said that the government of India assures the security of the money deposited in the banks.
The government of India is strengthening the mechanism to protect depositors. The proposed FRDI Bill is now before a joint committee and the act in this regard is yet to be passed. The rights of the depositors will be fully protected at the time of the legislation and the banks are being strengthened by the infusion of over Rs 2 lakh crore, the ministry also said. Furt, er the statement also read that the government is strengthening the rights of the depositors like never before and special care is being taken care of small depositors.
The bill does not propose to limit the scope of powers for the government to extend financing and resolution support to banks, including public sector banks. The provisions contained in the FRDI bill, as introduced in the Parliament, do not modify present protections to the depositors adversely at all. They provide additional protections to the depositors in a more transparent manner," the ministry also said.
The Finance Ministry however said that the Billis are depositor friendly when compared to other countries which provide for statutory bail-in without consent of creditors and depositors.
"Indian Banks 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 the integrity, security and safety of the banking system," said the ministry.
"The bill ensures that, in the rare event of failure of a financial service provider, there is a system of quick, orderly and efficient resolution in favour of depositors," the Finance Ministry also added.