An online petition against the bail-in provision in the FRDI bill has got thousands of signatures even as the finance ministry said that the proposal, under consideration of a joint parliamentary committee, is depositor friendly and provides more protection.
An online petition on Change.org against the Financial Resolution and Deposit Insurance (FRDI) Bill, 2017, has gone viral on social media, seeking public support against what it terms as an attempt to "allow a government entity to use depositors' money to save a bank on the verge of bankruptcy".
The petition was started by a Mumbai-based individual, Shilpa Shree, with a single signature and has got over 40,000 signups within 24 hours, supporting her appeal to Finance Minister Arun Jaitley to not let this bill pass with the 'bail-in' provision.
"Our hard earned money that we have saved for our children and for our future will be used to bail-in the banks," the petitioner said.
"This bill gives power to a government entity to use depositors money to save a bank on the verge of bankruptcy. This government entity can declare the bank doesn't owe you any money though you have deposited your hard earned money with it," the petition said.
Meanwhile, the Finance Ministry today said that the FRDI Bill is depositor friendly and provides more protection to them compared to existing provisions.
"The FRDI Bill is far more depositor friendly than many other jurisdictions, which provide for statutory bail-in, where the consent of creditors or depositors is not required for bail-in," it said.
The FRDI bill, introduced in the Lok Sabha on August 11, 2017, is under consideration of the joint committee of Parliament. The panel is consulting all the stakeholders on the provisions of the legislation.
"The FRDI Bill does not propose in any way to limit the scope of powers for the government to extend financing and resolution support to banks, including public sector banks. The government's implicit guarantee for public sector banks remains unaffected," it said.The government further said Indian banks have adequate capital and are also under prudent regulation and supervision to ensure safety and soundness as well as systemic stability. The existing laws ensure integrity, security and safety of the banking system.