Dear All ,

The Clause in to FRDI Bill for 'bail-in' clause is not to Protect Interest of depositor. This petition is to remove the " Bail-in" Clause from FRDI bill.

This Clause  “bail-in”, whose purpose is to provide capital to absorb the losses of a bank and ensure its survival. Here, survival does not mean safety of depositors’ money, but restoration of capital of the bank. The bail-in empowers the proposed Resolution Corporation to cancel a liability owed by the bank or change the form of an existing liability to another security.

All of us are aware that money in a savings or fixed deposit account is a liability owed by the bank to its customer. The bank promises to repay the money when demanded by the customer. Since the customer has not taken any security from the bank when handing over his money, legally, the customer is an unsecured creditor of the bank. With a ‘bail-in’, the bank simply refuses repayment of a customer’s money or instead issues securities such as preference shares (with no guarantee of fixed dividends) to a customer. This is in lieu of his deposits which are then used for recapitalization of the bank.

Read More " http://www.thehindu.com/opinion/op-ed/banking-on-legislation/article20005363.ece

Regards,

Mihir Shah