For the last few weeks, there have been nationwide discussions on the proposed Financial Regulatory and Deposit Insurance (FRDI) bill and the ‘threat’ it posed to common men. In the NDA regime, interest rates of public sector banks have been slashed to motivate the investors and also, in case of various small saving schemes too, interest rates have faced the same fate.
Still, many people believe that the demonetization drive was an unwanted move that brought inconvenience to people instead of the underlying the people dealing in black money. The hasty arrival of GST and faux pas along with it also didn’t help the growth curve of the nation. In such a scenario when the Narendra Modi Government is facing much wrath from the common people for its debatable monetary policy, the proposed Frdi Bill didn’t at all help the government.
After all, the banking sector is one arena where mere trust deficit can be extremely detrimental to the economy of the country. Call it rumor or bad PR, common people were of the opinion that government may simply take their money in the event of bailing out public sector banks. The FRDI bill which was introduced in August last year, the resolution corporation was given the authority to increase the current insurance amount of Rs 1 lakh.
No doubt, the FRDI bill proposes better return in such a scenario than the current law. Thus the government cleared all such debates and negative discussions saying that the bailout clause is not applicable to public sector banks. For private sector banks bailout would be considered only if a merger or acquisition seems not viable at all.
The Ministry of Finance in a statement thus mentioned,”The uninsured depositors, that is, beyond 1 lakh, of a banking company are treated on a par with unsecured creditors under the present law and paid after preferential dues, including government dues, in the event of its liquidation. As per the provisions of the FRDI bill, the claims of uninsured depositors in the case of liquidation of a bank will be higher than those of the unsecured creditors and government dues.”
It goes without any mention that Finance Minister hasn’t been very successful in ushering fresh blood to the Indian economy. Presently, the country is standing across the debate of Aadhaar fiasco and digital economy is still a far-fetched dream. The much-needed linking between traditional paper economy and digital economy is yet to be done and the Narendra Modi government cannot risk a single mistake in its policymaking as well the reforms in the economic domain. Be it passing the FRDI bill or slashing interest rates – in no way the central government can risk antagonizing the great Indian middle class and that too within a year of much hyped 2019 Lok Sabha Elections.