Why India shouldn’t use the ordinary depositor’s money to rescue banks

Abstract

The depositors of India’s commercial banks are worried about the Financial Resolution and Deposit Insurance Bill (FRDI), 2017, which was tabled in Parliament in the last monsoon session and was expected to come up for discussion during the current winter session. Even though the bill has been deferred for now and should come up for hearing next year, concerns remain. The fear is especially regarding Section 52 of the bill which mentions that a depositor’s money, among other things, can also be used in the resolution mechanism for banks. The alarm seems unfounded and premature as the bill is still to be discussed in the parliament, the method of resolution of non-performing assets is yet to be finalised, and the Resolution Corporation (RC), only relevant for failed financial institutions, has not even been established—all pre-conditions before a depositor’s money can be appropriated. Read more at: https://qz.com/india/1156278/frdi-bill-india-shouldnt-use-the-ordinary-depositors-money-to-rescue-banks/