Bail-in clause in FRDI bill should be removed: Assocham
Government's assurance that depositors' interest in case of a bank going down
under would be fully protected should be clearly and unambiguously spelt out in the Financial Resolution and Deposit Insurance (FRDA) Bill and a clause that seeks to treat depositors as other creditors and shareholders for bail- in, must be removed, the Assocham said.
The panic among the bank depositors has arisen largely due to 'bail - in' provisions in the FRDA Bill, something being tried for the first time in Indian financial markets. The intention seems to be that it should not always be the government which should take a hit for a bailout of a bank in trouble; and let the shareholders and other stakeholders, which include even the depositors (above the limit of insured amount) be responsible for saving a financial entity. Assocham Secretary General D S Rawat said in the Indian context, the concept of "bail-in" especially by depositors should be completely done away with and their monies in the banks have to be protected at any cost. 'Otherwise, the trust in the banking system runs the risk of being eroded and the savings by the households would find the way into unproductive avenues like real estate, gold, jewellery and even in the unorganised and informal financial markets run by unscrupulous people'
ASSOCHAM- Associated Chambers of Commerce and Industry of India
Chairman- Sandeep jajodia
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