FRDI Bill: Cooperators present their case before JPC

The apex body of urban cooperative banks of India NAFCUB has made a representation before the Joint Parliamentary Committee (JPC) which is headed by Bhupendra Yadav on the proposed Financial Regulation and Deposit Insurance Bill 2017 last week in Parliament House.

The NAFCUB delegation comprised Jyotindrabhai Mehta, acting President R B Shandilya, Vice-President Vidhyadhar Vamanrao Anaskar, financial expert G Krishna and Nafcub Chief Executive Subhas Gupta, among others.

Talking to Indian Cooperative Jyotindra Mehta said as far as smaller urban cooperative banks are concerned we do not support the FRDI Bill, though it may be okay for the bigger ones counting 54 in the country.

Lauding the UCB sector Mehta said while NPAs of commercial banks are more than 11%, it is just 2.4 percent for UCBs. In case of financial problems in the UCB sector we are left at the mercy of RBI. There are indeed lesser cases of causalities owing to lower NPAs in the sector and we tried to impress upon the JPC on the pressing need of having some kind of a revival mechanism for smaller banks, Mehta said.

The delegation also touched upon the second part of the FRDI Bill- that is Deposit Insurance before the JPC. It wanted that the limit of insurance amount should be increased depending on the size of the bank in the UCB sector.

The Nafcub team also advocated rationalization of premium being paid by UCBs. “Today we pay more premium and the sum insured that one gets is less; there is an urgent need to rationalize it”, argued Mehta.

It bears recall that the controversial Financial Resolution and Deposit Insurance Bill, which was earlier introduced in the Lok Sabha, was referred to the parliamentary standing committee which after scrutinizing the bill will submit its report in the next Budget Session.

The committee was looking into the Bill that aimed to deal with bankruptcies in banks, insurance companies, and other financial intermediaries through a ‘Resolution Corporation’ and a ‘Corporation Insurance Fund’.

Earlier, Cooperators including Chairman Emeritus of Visakhapatnam Manam Anjaneyulu have lambasted the central government for bringing in the Financial Resolution and Deposit Insurance (FRDI) Bill.