New Finance Bill Allows Banks To Use Your Money Without Your Consent

The Horror Story That Every Individual Is Going To Face If This Bill Is Passed. The Banks Who Have Been Our Saviour Will Now Steal Our Hard Earned Money!

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Some major financial reforms are going to happen if the Central Government approves the bill. The Union cabinet has approved a proposal to introduce a bill to deal with the bankruptcy of banks. Doesn’t sound bad, does it? But it’s actually threatening our hard earned money.

If the government approves this bill, then the bank will have a special ability known as ‘Bail-in’; it is proposed to rescue the banks, in scenarios of severe financial distress. The banks who are on the verge of collapse can opt for the ‘bail-in’ provisions for saving themselves. 

So what does it mean?

This method is used for rescuing a financial institution, which is on the brink of failure by making its creditors and depositors take a loss on their shareholdings or deposits. Under Section 52 of the FRDI Bill, the powers of the Resolution Corporation are so extensive that it can cancel the liability of a bank — which means that it can declare the bank doesn’t owe you any money though you have deposited your hard earned money with it. 

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It can also modify or change the form of the liability. So, for example, if you have put an X amount in Fixed Deposit for 5 years, the corporation can change it to 20 years. Or they can take the amount from your savings and convert it into a locked-in deposit. 

They can even change the rate of interest and there is nothing the investors can do about it. The corporation covers up to Rs. 1 lakh worth of deposits by individuals in Indian banks.

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Anything over and above Rs. 1 lakh does not have this protection, which means there is a theoretical possibility that a bank account holder with a large deposit might lose a lot of money if the bank goes down.

While Banks when asking for collateral security, usually, tend to ask for more than the amount of loan taken. The major question is that they already have considered the possibility of bad loans, so why does it need depositor’s money to save the bank? Perhaps because of the bad investment calls? So when they have made a few errors in their judgement, then why should we, the common people have to face the repercussions?

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It is illogical for the government to expect depositors to bail out the banks when they don’t get any share in profits.

H/T: Logical Indian

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Hema Sanghavi

A crazy Bibliophile who is an ambivert. Harry Potter fanatic, and a foodie. Usually ends up reading fan-fiction and dreams of writing one!

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