The government has introduced the ‘Financial Resolution and Deposit Insurance Bill, 2017’ (FRDI) in Parliament. The Clause 52 of the bill says that “the Corporation can cancel repayment of deposits, convert deposits into long-term bonds or equity and enforce haircuts to whoever the bank owes monies.”   The FRDI bill has shaken the trust of aam aadmi as they have put their hard-earned money in banks on the implied trust and belief that their money is safe with government banks. If the bank goes phut, why the depositor should lose their hard-earned money for no part of failure on their part? Even like farmers committing suicides, senior citizens and others who have parked almost all their savings in banks may be tempted to commit suicide. Take care of this point.

The government has clarified that no such thing will happen; but is the present government trust worthy? Aam aadmi and small businessmen have already suffered because of some policies of government like demonitisation and GST.

The Bill is not yet passed. But the way Bills are passed in Parliament -mostly without adequate discussions and under …. It will not be surprised if this Bill would be having the same fate - no adequate discussions and passed under halla only.

In the presence scenario of huge NPAs, it is in the interest of banks to have more of deposits to run the show with goodwill in public eye and to make deposits as a quite an attractive investment with adequate security and a liquidity ease-the Deposit Insurance must be at a practical and realistic level of Rs One crore - a practical value of deposit considering inflation and continuous falling Rupee worth. The senior citizens must be exempted from provisions of FRDI Bill. They must be fully protected - they must have deposit insurance of all their money parked in Banks -without any limits for obvious reasons.

If this bill is passed as it is, it would defeat the purpose of cashless economy - people would be forced to keep money in cash or…. and even there would be more generation of black money- the objectives of government on these accounts would be defeated. Adequate measure are must to safeguard these drawbacks. If at all government wishes to make such law, it should be applicable to new deposits and other savings bank accounts only - no way to have retrospective effect.