Kolkata: West Bengal Chief Minister Mamata Banerjee has written to Union Finance Minister Arun Jaitley urging immediate withdrawal of the FRDI Bill to save people from "financial ruin".
In a letter to Jaitley, she said people will lose faith in the banking system if the Financial Resolution and Deposit Insurance (FRDI) Bill is not withdrawn.
The FRDI Bill will completely shatter the age-old faith and trust reposed by the people in the banking system of the country, she said in the letter.
The Centre is planning to table the bill during the Winter Session of Parliament.
"I will like to sincerely appeal to the Centre to desist from enacting this Draconian law and withdraw the bill to ensure that the common people in the country are saved from financial ruin," she wrote.
Already, people are reeling under the adverse effects of demonetisation and hastily-introduced GST regime, she said.
Banerjee felt if the FRDI came into being, it would "forcibly" take away the hard-earned life savings of common people entrusted to the banks, for "bailing out one section of vested interests, who have siphoned off the loans given to them by the banks".
She said this is tantamount to cheating the depositors for no fault of theirs.
Citing examples, the chief minister said the bill would forcibly convert the deposits into equity shares of the bank, when it goes bankrupt.
It could change the nature of deposits from one class to another, thereby changing the interest rate or the tenure of the deposit.
It could also impose a stay on depositors' right to withdraw deposits before maturity. It could also put a moratorium on payment of interest during repayment of deposits on maturity, she said.
“To cover up the failures and allow one section of the vested interests to go unpunished, the Centre wants the common depositors to forgo their life-savings. This is really shocking and unacceptable,” she said.
It was during the Parliament’s Monsoon Session that the Financial Resolution and Deposit Insurance (FRDI) Bill was introduced and has gone through rigorous public debates since then. A joint Parliamentary committee is currently studying the draft Bill and is expected to come out with a report, following which it is likely to be taken up for legislative approval in Parliament.
However, the concerns of consumers and bank employees have raised some pertinent questions.
Banks have been forever known to be cornerstones of financial security. But with the current Bill in contention, several bank employees on condition of anonymity said that “the very foundation of financial security is being questioned.”
The bill provides for a bail-in option, which means depositors could lose control of their money which would be converted into securities such as shares in the bank in case the bank’s financial situation deteriorates. Simply put, banks will be using depositor’s money to recoup.
(With PTI inputs)
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