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FSDR bill : NDA govt trying to give corporate sector a backdoor access to savings of small depositors : TPCC

FSDR bill : NDA govt trying to give corporate sector a backdoor access to savings of small depositors : TPCC

Hyderabad, Jan 23 (UNI) Telangana Pradesh Congress Committee (TPCC) Treasurer Gudur Nararayana Reddy on Thursday alleged that the BJP-led NDA Government at the Centre was trying to give Corporate Sector a backdoor access to savings of small depositors by introducing Financial Sector Development and Regulation (FSDR) Bill.

In a media statement here, Mr Reddy also alleged that the NDA Government was trying to privatise the Public Sector Banks through FSDR Bill so as to benefit a few Corporates by granting them access to the hard earned money of common depositors.

Originally, the BJP Government had introduced Financial Resolution and Deposit Insurance (FRDI) Bill, 2017 which was later dropped due to a controversial 'bail-in' clause. However, now the same bill is being introduced with some modifications which are more dangerous than the original FRDI Bill, he said.

The Congress leader said the Bill provides for constitution of a new Resolution Corporation (RC) which will monitor the health of financial firms like banks, insurance companies, mutual funds, non-banking finance companies. In case of failure of any of these firms, the RC will have the mandate to take measures to resolve the crisis without involving RBI and other financial regulatory authorities.

Mr Reddy said the FSDR would make the existence of Reserve Bank of India (RBI) totally irrelevant in handling banking crisis.

With the introduction of FSDR Bill and constitution of a new RC, the RBI will lose its regulatory powers on banks which are in crisis or those who might face crisis in the near future," he said.

"After all the Resolution Corporation (RC) will be a nominated body to be appointed by the political bigwigs. Hence, the RC, without proper knowledge of handling the banking system, may jeopardise the total banking and financial system in the country and cripple the economy," he said.

Referring to observations made by financial experts, the Congress leader said that the controversial bail-in clause of FRDI Bill has been modified and incorporateed in FSDR Bill. It gives the new RC powers to terminate contracts, write down debts, modify liabilities and also set up bridge institutions.

"This clearly means that the RC might terminate the contract a depositor signs with a bank and he/she might lose their deposits fully or partially.

It will also have powers to write off debts of select few powerful corporates as almost 86 per cent of NPAs belongs to a few big corporates, he added

Mr Reddy said that there was no need for a new RC when RBI was already doing its job efficiently.

The FSDR Bill would make it easier for the Central Government to handover public sector banks to private sector, he said it would empower the new Resolution Corporation to handover any PSB to the private sector citing crisis, rising NPAs or other possible crisis. Therefore, the Corporate sector, which is responsible for over 86 per cent of NPAs, will gain full control over the PSBs and their deposits. This will also have an impact on various welfare measures like crop loans, he added.

The TPCC Treasurer said once privatised, the banks might charge higher interest rates on farm loans and they might also refuse to give loans to priority sector.

UNI KNR CS 1730


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