The Narendra Modi led NDA government has proposed a Financial Resolution and Deposit Insurance Bill, 2017 which will be tabled for legislative approval, possibly in the upcoming Winter Session itself. A joint parliamentary committee is currently studying the draft Bill. The committee is expected to come out with its report soon, following which the bill is likely to be taken up for legislative approval in Parliament.
The Bill has faced opposition from various quarters, namely bank unions, individuals, financial analysts and so on. An online petition initiated by Mumbai resident Shilpa Sree, against the FRDI bill got more than 40,000 signatures merely hours after it was started. Now the Campaign against the Bill urges you to:
“FRDI Bill, if enacted, might rob the common people of their savings; give authoritative powers to a body (Resolution Corporation) to weaken, merge and even liquidate public sector banks, leading to their privatisation. This is a Bill pushed through without a public debate and adequate consultations. Demonetisation and GST was bad enough, it left a deep scar on the common people informal economy and the poor. FRDI will fundamentally change the financial system of this country, where poor will be made to pay for the debts of the rich and wilful defaulters. Please ask your Member of Parliament to not to legislate the FRDI Bill. Visit http://www.repealfrdi.net to send an email to your MP or know more about the proposed bill.”
“Thank you for being a part of the Repeal FRDI campaign. In the last one month, over a couple of thousand people have sent emails to their Members of Parliament asking them not to legislate the proposed FRDI Bill.
“However, as the Joint Parliamentary Committee will submit its report in February, we urgently need to reach out to as many people as possible in the next one week or so. Collectively, can we aspire to get at least 25,000 emails by the month end so that there is a pressure on the government to withdraw the bill?
“One of the simplest ways through which we can make this a mass campaign is by reaching out to our contacts — in person, through email, website, social media, and publications — requesting them to not only send the petition themselves but also to share it widely.
“Given the majority of the ruling party, unless there is a mass appeal against the FRDI Bill, there is not much hope to prevent this bill from getting legislated.
Background
The Bill aims to establish a Resolution Corporation that will monitor financial firms, anticipate risk of failure, take corrective action and resolve those. The financial firms may be classified in several categories based on the risk of failure 1. Low, 2. Moderate, 3. Material, 4.Imminent, 5.Critical. Depending on the status of the financial firm, the Resolution Corporation may take over the management of the firm using methods such as (i) merger or acquisition, (ii) transferring the assets, liabilities and management to a temporary firm, or (iii) liquidation.
A contested definition in the bill is of the ‘bail-in’ provision which, analysts apprehend, will put the depositors’ money in the banks at the risk and drive the economy towards a crisis worse than demonetization.