FSDR Bill Will Lead To Privatisation Of PSBs: Congress

Hyderabad, Jan.23 (Maxim News): TPCC Treasurer Gudur Narayana Reddy said BJP Government at Centre was trying to give corporate sector a backdoor access to savings of small depositors by introducing Financial Sector Development and Regulation (FSDR) Bill.

Narayana Reddy, in a media statement on Thursday, alleged that the BJP 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 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, etc. 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.

Narayana Reddy said that the FSDR would make the existence of Reserve Bank of India (RBI) totally irrelevant in handling banking crisis. He said no public sector bank has gone bankrupt after 1969 and whenever crisis occurred the RBI intervened and managed them through merger, takeover or other means. For the same reason, he said people have lot of faith on public sector banks where they deposit their savings. “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 near future,” 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 incorporate in FSDR Bill. It gives the new RC powers to terminate contracts, write-off debts, modify liabilities and also set up bridge institutions. Further, he said the FSDR Bill would make it easier for the Central Government to handover public sector banks to private sector. He said that the Congress party would strongly oppose the move both inside and outside the Parliament.(Maxim News)