FRDI Bill and bank depositors

The introduction of the Financial Resolution and Deposit Insurance (FRDI) Bill in Parliament has raised a storm of protest and that for very cogent reasons. What the countless depositors in public sector banks are fearing is that the Government’s real intention is to appropriate the money deposited by the public in their savings bank or other accounts to neutralize the losses the banks have been made to suffer by the dishonest corporate Moghuls who took lakhs of crores of rupees from the banks as loans and never repaid them. In simple terms it means that the corporate sharks have fleeced the banks and made them sick and now the Government is enacting a law that will entitle the banks to grab the depositors’ money to make up for the losses they have been made to suffer by the dishonest corporate bosses.
The Government is no longer in a mood to recapitalize the banks to restore them to health as it was doing earlier. The corporates have looted the banks, have looted the people’s money and now the common people will have to part with their own hard-earned money to compensate the banks. Naturally it has caused widespread panic among depositors. For Tom’s sin Dick will have to pay while the real culprits, the corporate Moghuls, will get away with impunity.
Most Opposition parties have voiced their strong protest against the Bill. Trinamool Congress supremo Mamata Banerjee has vowed to build an all-India movement against the Bill and make it the main planks of her propaganda against the BJP in the coming Panchayat polls in the State. The people have an intrinsic faith in public sector banks. They know – at least they knew up till now – that the money deposited in PSU banks is safe because the Government is the guarantor. Now that faith will be gone. Earlier the Government destroyed the people’s faith in the Reserve Bank of India, the country’s central bank, by demonetizing high-denomination currency notes without consulting the RBI or making it a part of the decision-making process. Now the faith in the public sector banks is also going to be destroyed.
If the Bill is really passed in Parliament and made into a law, the first instinct of the depositors will be to withdraw their moneys from the PSU banks and deposit them in private banks. This will make the PSU banks still more sick and give the Government the excuse it badly needs to merge or liquidate the banks and hand the entire banking sector to private operators. The nationalized banks will just cease to exist and the depositors may lose their money. Such a blatant attempt needs to be resisted.

Thursday, 21 December, 2017