FRDI bill may take away all your hard-earned money

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The main issue with this bill is not the bail-in process, but the open ended manner of the bill to pave way for loose interpretation and abuse. There is nothing bad about having a bail in process for the worst case scenarios. I will support such a mechanism if the conditions under which it is invoked is clearly defined and limited and the process itself will require representation from both govt and judicial system to ensure that it is being done under the right conditions and manner

The bill does not recommend any procedures to avoid reaching such a stage and just defines how the bail-in and bankruptcy process should look like once the bank is already ruined..This is only going to encourage laxity.

Also, a govt bail out is technically at our cost as well since it just means that our tax money is used for it. But now what the govt wants is saying is that they want to avoid spending our tax money for it and instead wants to use the money that's left with us after paying the taxes.
 
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vivek.krishnan said:
Bank employees want to strike against the clubbing of banks mainly, which I suspect has gone for a toss?
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I think its because of this -

The Bill proposes for setting up Financial Resolution Corporation (FRC), a new authority to deal with liquidation and resolution of Banks Insurance and other financial institutions.
"This FRC is going to supersede power of RBI with power power to liquidate any bank and to use depositors' money to bail-in a bank.
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Who will be on the FRC? Ministers or Group of Ministers? Will people from RBI and banks be given a part in it? etc etc. Basically, the govt is trying to walk over the financial institutions now.
 
6pack said:
I think its because of this -

Who will be on the FRC? Ministers or Group of Ministers? Will people from RBI and banks be given a part in it? etc etc. Basically, the govt is trying to walk over the financial institutions now.
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This is what AIBEA says officially

“Our banks deal with huge public money and total deposits in the banks today are more than Rs 106 lakh crore. Unlike the American and other western banks which are run with share- holders and investors’ money, banks in India are run with people’s hard earned savings kept as deposits,” AIBEA said in a statement. Hence, safety of people’s money should be the top priority, it said.
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To think an bank employee union has more sense than majority of the people keeping their money in the banks..lol.

But seriously, I think the main concerns even for the employees is the how the govt wants to throw away their own responsibility to the wind by putting together a loose bankruptcy and liquidation bill and a regulatory body and letting the dying bank fend for itself using the customers money till it dies. Time and again, bank employees have become the target of people's anger as the politicians force absurd policies and merrily sit in their AC rooms as the world burns. Even during demonetization, people's anger was directed at bank employees though most of the problem's were the govt's fault. The employees were so overworked at the time that some even died while on the job. Furthermore, bank employees particularly in nationalized banks are forced to do a lot of things including depositing money in the banks they are employed. Usually because of absurd targets given to them.
 
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From the article

The main points of objections to the legislation
  • The bill’s biggest problem is its controversial provisions of a “bail-in”clause which suggests that depositors’ money could be used by failing financial institutions to stay afloat.
  • The Resolution Corporation (rescue body), which is proposed under the bill, can use public money in case the bank starts to sink. The bill empowers the rescue body to decide the amount insured for each depositor. The rescue body can cancel even the Rs 1 lakh insurance that depositors get under the current law and a bank can even declare that they don’t owe them any money at all.
  • People are worried that if this bill is passed in Parliament, the depositors’ rights may go down the drain, but that is ONLY if the bank is going down the drain, and that is a rare scenario.
  • It may seek to place the entire financial structure of the country at the mercy of the government.
  • The legislation proposes to amend the SBI Act in order to insert a clause for its liquidation which gives rise to apprehensions that in due course the government might even take recourse to privatization of the SBI.

The bill document itself is simple enough to understand for anybody with knowledge of English language. Most people need to see only Section 29 and 52 which cover the liquidation and bail-in situations.
 
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Lord Nemesis said:
People are worried that if this bill is passed in Parliament, the depositors’ rights may go down the drain, but that is ONLY if the bank is going down the drain, and that is a rare scenario.
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How come all the PSU Banks are in the red and need LIC / GIC/ UTI money to keep them afloat? Just yesterday I saw that some banks are getting ready to sell of their holdings in some companies etc to get some money to their treasury. If the scenario is os rare, how is it that so many banks are near that scenario? If the banks couln't manage their money when they were profitable, I don't think they can handle their losses too. One day in future they are going to merge into one big mess, gobble everything up and won't even burp.
 
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FYI, the stuff I posted is a direct extract from the article link posted before me and for those who want to read just the meat of it. The author does not seem to understand the present condition of the PSU banks Just recently, there was some injection of money by central govt into some PSU banks. They are all in real bad shape and this bill is not just a coincidence.
 
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Its more like he understands but deliberately wants to mislead people reading his article. I wonder if such people get paid to misdirect people.
 
rdst_1 said:
If the banks are in such a good health, then what is the need for such a radical bill being presented.
My father, who was a banker all his life, used to be so pissed at how banks in our country have been run. The RBI, has never been a successful regulator and without a strong regulator most of the banks have descended into bad loans, mostly at the hands of politically related entities.

Even if the government stake holding is high and bankruptcy would probably mean a government bail out, then that doesn't mean there are no losses. Even if the common people's money would be safe due to bail out, the people will lose out on the promised 'Vikas' since the money meant for that will be used to pay for the billionaires' NPAs.

So, yes, the people will be angry when they see that instead of making stricter rules on how banks hand out big loans and increasing accountability for people who take such loans, the laws being proposed are instead providing a way out for banks to write off such loans by holding hostage other people's money.

The optimists like you might believe that such a situation might never arise but you can't say other are wrong when they question why such options/loopholes are being presented in a law. Wouldn't you say that it would serve the nation better if instead, laws were passed to make the selling of assests and other proceedings faster in case of an NPA and make it stricter for such big loans to be passed in the first place.
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his questions bears repeating as i found no answers in your reply

Coming back to the OT of FRDI, two most important questions ;

How many Nationalized Banks have gone bankrupt in last 30yrs? Are Our concerns totally far from real?

What's the Government Stake Holding in various Nationalized banks? What Does bankruptcy for Nationalized banks mean?
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I remember having a discussion with some one here a few years back who told me that Indian banks were pretty safe with depositors money. Far more safe than the US say. In the case where a bank went bust in the 90s the depositors got their money back after some time. All of it.

unless you know to the contrary

- How many Nationalized Banks have gone bankrupt in last 30yrs? NONE!

- Are Our concerns totally far from real? I sense the usual fear mongering that preys on people's ignorance. How people here qualified to properly interpret the bill ? also NONE!

- What's the Government Stake Holding in various Nationalized banks? What Does bankruptcy for Nationalized banks mean? also valid

Who wants to take a stab at that last one?!

swagatrath said:
I tried reading that actual bill pdf but found it difficult to understand it.
These news articles are somewhat comprehensible to me and what I understand from it is - "Banks now can just use our hard earned money if they are going bankrupt".
Then I feel it will just give encouragement to banks in order to give out more big loans to people like Malya. Because they now have a safety net that if they can't recover the loan then they can always declare bankruptcy and take away all the money of common people.

So I think I'm missing some point here. What is the purpose of a bill like this in the first place?
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FactCheck: Can Banks gobble up your deposits as per a new proposed ‘Bail-in’ Bill?

The Bill provides for a framework to grade organisations based on grades such as Low, moderate, material, imminent and critical risk to viability. This provides depositors a transparent way to gauge the health of a financial institution. Can the naysayers point out a system in the current regime which informs commoners the health of their respective banks?
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This is the problem!
 
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pratikb said:
Who will creat bill to kick themselves out of govt. power.

Who will vote for govt. who is taking away the hard earned money in bank ?

Get life. Apply some common sense.
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I have a simple bullshit detector that anyone can use to gauge any topic without even understanding what it is about

Before reading or watching something, measure pulse rate and blood pressure
After finishing reading or watching, measure again

What is the difference ? if its jumping and erratic then you got fed lies

if it is stable then no lies. Does not mean it is truth but you can be certain there was no BS :)

I find this very useful in deciding what not to watch or read
 
Jaitley making worse and worse decisions every time. Guy never learns from his mistakes due to his ego.
I wonder what will happen in Feb when the Finance bill comes up. He was hinting to make income tax till 3 Lakhs zero percent. IT dept must be going bonkers thinking they will loose crores of rupees from poor people.
 
@blr_p Thanks for that article link.

Quoting some of it here for the benefit of others..

A particular clause, from a draft bill is being taken out of context, to create mass hysteria. The clause while not perfect, seems to be an improvement over the current situation, and since it is only a draft bill, the clause can be further improved. In such times it is important to not spread panic among depositors i.e. the common man. The media, instead of being a good partner or medium for voicing people’s concerns is indulging in complete lies to garner eye balls and spread their own propaganda. It is clear that they have no role to play in the interest of the people of this country.
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sandeepsachin said:
is it time to start pulling out money ? Please guide
@Lord Nemesis @6pack
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I will wait and look at what happens for the moment.

btw, if we were to empty the bank account, where will we keep so much money at home? Under the bed or hidden in books etc? Personally, I don't like to keep money at home because it is a source of extra headaches. If we see too much money we will try to spend it. If we don't spend it, we have additional headache of trying to keep it safe. That means spending time and money hiding it or buying a safe etc.
 
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