Cooperators including Chairman Emeritus of Visakhapatnam Manam Anjaneyulu have lambasted the central government for bringing in the Financial Resolution and Deposit Insurance (FRDI) Bill. The cooperators have assured customers that their deposits are completely safe with them.
The FRDI bill referred to Parliamentary Selection Committee provides for conversion of deposits into long-term deposits or use of these deposits towards the losses suffered by a bank if it went bankrupt.
Anjaneyulu who is also a Nafcub Director said the proposed bill would have a negative impact on the financial sector. Bringing the entire financial architecture including SEBI, Insurance, and Pensions under the FDRI, would deal a mortal blow to the economy, he warned.
Talking to the media Anjaneyulu said people are expressing doubts about the safety of their deposit and saying in order to minimize the RBI role in the banking industry, the NDA government has proposed the FRDI Bill. The govt is indirectly trying to maintain its grip on the banking industry, he charged.
The Nafcub director claimed most of cooperative banks boast strong financial background and only 150 of the 1,574 banks are weak. Also, urban banks account for only 3.6 per cent of the deposits in the banking sector and therefore, there is nothing to fear with regard to urban banks,” he said.
Raghavendra Rao Chairman of the Visakhapatnam Cooperative Bank said the bill, if adopted would cut the powers of the apex bank RBI as well as regulators such as Insurance and Regulatory and Development Authority, Provident Fund Trust Board and Securities and Exchange Board of India.
“When the Government itself has appointed huge apex regulators in the country over the years to control the institutions which come under the purview of those regulators, then what is the need for it to interfere in the duties of the regulators which sends out a negative message to the people”, Rao asked.
Others who spoke on the occasion included Chairman of Kanaka Mahalakshmi Urban Bank who said with the FRDI Bill, the entire cooperative banking system would collapse.
Chairman of Maharaja Cooperative Urban Bank M. R. K Raju also said the proposed corporation will closely monitor financial companies, classify them in accordance with their risk profiles and step in to resolve in case of a failure – this could mean taking over a financial company.