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I Dread To Think Of Banks-keep Your Money Hidden In A Tamarind Pot.

Discussion in 'Snippets of Life (Non-Fiction)' started by jayasala42, Dec 10, 2017.

  1. jayasala42

    jayasala42 IL Hall of Fame

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    Persons with rich experience in banks like Cheeniya Sir may kindly guide the people who essentially depend on the bank deposits.

    All the hastles that we come across in linking aadhar to mobile phones have been narrated,though in humour by our friend.To make a line short, draw a bigger line by the side.That seems to be the policy of the present rule.

    You forget all your worries about Aadhar, mobile, smart card etc.A real dragon is approaching ius in the form of FRDI bill 2017, with a built in bail-in clause.
    To explain in simple words, if a bank is in the verge of failing, it can utilise the deposits of customers to recapitalize the bank and the bank is at liberty to convert the deposits in the form of any other instrument that the bank deems fit.

    Supporters of the bill state as under:

    It is part of the sovereign commitment given in the meeting of G-20 countries of which India is a signatory as also the fall out of the FSLRC recommendations. As we become part of global financial system, we will have to adopt global financial practices whether we like it or not.

    Most of the apprehensions expressed by our friends may be based on the wild imagination of the motivated writing of the press (mainly because it is thought this is the initiative of the Modi Government). The press is predicting that the whole financial world would come crashing on depositors, and the poor and retired, especially, would be hit hard.

    It has protection as it is today. Nothing More Nothing Less.

    There is nothing fresh draconian in what has been tabled. The dragon is present even now. When we can sleep peacefully with dragon in the cupboard all these years, why lose sleep now?

    The essence of the bill is resolution of a failed/failing financial firm like a bank or insurance company or a mutual fund or a pension fund or a deposit taking NBFC or any notified financial servicing agency.

    An institutional set up, a statutory Corporation, would handle the distressed matters for of financial services firms for resolution.


    All conditions relating to settlements are almost the same as is prevalent now but with a difference of an institutional set up under a rule of law.


    The other major contentious issue that is reported is *Bail in*. Any failed institution would pay the liability with the net tangible assets. When liability far exceeds the assets, naturally a scheme would be worked out to reduce the liability to the extent asset is available for distribution and pay out the holders, as in vogue today in liquidation proceedings but these jargons are missing in the old Acts.

    We cannot set aside the anxieties as purely imaginary.


    As we have been very much exposed to the functioning of banking sector for nearly three to four decades by virtue of our earlier stint and as we are equally matured enough to weigh and analyze the good and bad, pros and cons of any proposal, our apprehensions are definitely not based on wild imagination. they do not want to lose their hard-earned money invested in government banks which have been considered safe and secure all along.



    The anxiety that is lurking in our minds causing us to lose our sleep is only government’s creation. Till last year, the situation was not that bad and nobody anticipated the present position of PSBs getting cornered on account of mounting NPAs which has been causing concern to RBI, Government, and other regulatory authorities. In fact they have lost their sleep and a stage has reached that the capital of the bank is likely to get eroded though not tomorrow, may be a day after tomorrow. The resolution efforts under the Insolvency and Bankruptcy Code are also not likely to bear fruits on the expected lines because of inherent flaws in the said legislation. This legislation has already proved to be a half-baked one, indirectly strengthening the hands of the big sharks where a large chunk of tax-payers’ money has been blocked. When the earlier investment itself has proved to be unproductive, there is a move to drain thousands of crores further in the guise of recapitalization. Where it will end, with what result - nobody can predict.
    As retirees, more than 90 per cent of us do not care to look at MF or NBFC to park our hard-earned savings. We ensure maximum safety for our funds and income resulting out of that to supplement our pension.

    Our apprehensions are therefore genuine in the present context.

    .For a common man, every pie is earned out of his sweat and blood and he cannot afford to lose it by any name, you call it.
    People who are stated to have misinterpreted,are lawyers and scholars.They have abundant knowledge about each and every move and the actual shape it may take in due course.
    The readers too are fully equipped with knowledge and they cannot be treated as dull headed prepared to believe any rumour.Definitely there is some real cause for fear or anxiety,which didn't prevail for the past 60 years.Things have been very smooth for people who have 'nil' knowledge of Stocks and shares and even with low returns people had some peace of mind.
    Even if you go to any bank like ICICI and meet the top official in person and ask for some personal advice,they advise you all in sincerity to keep the min in the bank. Invariably they don't offer any open suggestions except to advise us to transfer a portion of our deposits to their own Balanced Funds- a marketing strategy too.
    Day by day petitions thro Change-in org are increasing and definitely it may create an uproar.
    Strangely enough the TV channels who have threadbare discussions on the legal heirs ofJ. J. ,who passed away on 5th Dec 2016 and talk about the conditions of doing DNA tests in an elaborate manner, have not opened their mouths about this vital issue.Understood that there is some unwritten restriction over this issue.Why?
    It is but human nature to worry about their long saved money,which has been preserved for facing some calamities or distress which may never happen at all.It is for the Govt to impose faith and regain the confidence of the public in very clear terms to convince the public.To make them read protective clauses or lines'subject to' etc is a kannaa moochchi game .
    There is enough awareness in the minds of the public though they may not know about 'technical terms'.
    Why can't the authorities issue authentic circulars in simple plain language in all the regional languages without altering the essence of the real intention to alleviate the fear from the minds of the public? There are linguistic experts to draft the circulars in plain intelligible language even at this stage so that there is no need for anxiety? They need not say' it is in the primitive stage and it will be amended etc etc --all jargons.

    The systematic vacuum, and systematic failure and systematic progress towards systematic bankruptcy all created through
    systematic corruption spreading its ugly wings with the systematic kind co-operation of the authorities.
    Now we find the Tamil proverb'Aadu nanaikrathe enru onaai azhuthathaam(The wolf crying ,being worried about the wet sheep) coming handy
    to the authorities which may make the things worse.
    ' Cross the bridge when you come near' may be applicable to certain issues and definitely not to this serious problem which may affect each and every citizen.

    Jayasala42
     
    mushroomm, Naari and joylokhi like this.
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  2. joylokhi

    joylokhi Platinum IL'ite

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    Yes, Jayasala maam, had got wind of this bail-in clause issue through a whatsapp forward. It is surely worrying although it is said, it is in the process of being made as law. Once it comes into effect, we the public will not be able to do anything. However, even now - when nothing is laid out in clear terms, no responsible person from banks also will or rather want to help out in this. We can only be alert and watch out for notifications of which banks will be affected, and plan to switch banks accordingly if possible. That too, is a troublesome process, as most of us would be having accounts over a long period and got used to a certain banks working. Awaiting further authentic information on the above.
     
    GeetaKashyap likes this.
  3. GeetaKashyap

    GeetaKashyap IL Hall of Fame

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    This is a worrying news.
     
  4. jayasala42

    jayasala42 IL Hall of Fame

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    Dear Joylokhi and Geeta,
    Let us await the outcome of the bill.
    Already more tahn 80,000 people have signed the petition thro Change-in,org.
     
  5. Naari

    Naari Platinum IL'ite

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    I just read this article where Jaitley claims the FRDI Bill protects depositors better than before, but I am not convinced as I don’t see much protection other than the normal priority of debt claims laid down by law in a bankruptcy!

    New FRDI Bill won't take away your money in the bank: Finance ministry

    Thanks OP for this heads up, I am going to withdraw all my money next time I go to India Though I am dealing with the hassle of converting to NRI a/cs right now due to the adhaar linking mandate! Any word on extension of that yet?
     
    Last edited: Dec 11, 2017
  6. jayasala42

    jayasala42 IL Hall of Fame

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    This has become a head ache to everyone including NRIS.Many NRIs have invested their hard earned money in the names of their parents in the good faith that let the parents enjoy the interest and the principal could be utilsed after their life time.NOw the question is whether any principal will be left behind.

    Jayasala42
     

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