For once it is a victory of cooperators and NAFCUB. Financial Resolution and Deposit Insurance (FRDI) Bill that caused unease among them has been withdrawn from the Lok Sabha. The FRDI Bill had a ‘bail-in’ clause for resolution of bank failure which was regarded as a step against the savings account holders.
With the bill withdrawn, the status quo will prevail and the deposits will be secured under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
It bears recall that the apex body of urban cooperative banks of India NAFCUB has made a representation before the Joint Parliamentary Committee (JPC) headed by Bhupendra Yadav on the proposed Financial Regulation and Deposit Insurance Bill 2017 in the beginning of this year in Parliament House.
The NAFCUB delegation comprising of Jyotindrabhai Mehta, R B Shandilya, Vidhyadhar Anaskar, G Krishna and Subhas Gupta, among others had 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.
Hailing the move Jyotindra Mehta said as far as smaller urban cooperative banks are concerned FRDI Bill was not a good initiative. He also said while NPAs of commercial banks are more than 11%, it is just 2.4 percent for UCBs.
The Bill aimed at dealing with bankruptcies in banks, insurance companies, and other financial intermediaries through a ‘Resolution Corporation’ and a ‘Corporation Insurance Fund’.
Cooperators including Chairman Emeritus of Visakhapatnam Manam Anjaneyulu had also opposed the (FRDI) Bill.