deposit Insurance Bill

Shalini Sen  Guptha’s article , “Another tool of resolution” in the Hindu last week  highlights the good points of the  proposed Deposit  Insurance Bill. Nevertheless it is not going to allay the fears this proposed Bill has created in the minds of the depositors of the public sector banks.

India is not America or and nor can it be compared to  any  other European nation as the author has done .Quoting how the Lehman Brothers was helped, EU bank recovery Resolution Directive and their stringent laws to regulate banks is not enough to satisfy middle class Indian depositors. For them it is the only safe place to keep their hard earned and saved money. Other nations do not have these many public sector banks working till today safely under the control of RBI.

Moreover, Increasing number of senior citizens have entrusted their retirement funds and savings in public sector banks and depend on the monthly interest from it for their dignified living. Their growing medical expenses are met out of it without burdening their care taking families. They are clinging to their deposits as life boats for emergency situations. Already the senior are undergoing 25% cut in their interest income due to interest rate cut. Who is going to compensate them? In America no body put their savings in fixed deposit for monthly income since, the rate of interest is as low as 2%. They put in their savings in mutual funds or equity market and they have  many senior friendly subsidised schemes and covered by liberal pension .Even for middle aged Indian citizens , their deposits getting locked up for more period than planned will create acute fears since, the memories of demonetisation  hardships are still fresh in their minds  

This government seems to be very fond of adventures in the financial sector in the name of structural reforms. To them they are surgical strikes, but the civil society should have the stamina to bear the consequences of these strikes. People are yet to recover from the hard ships they had to endure due to demonetization. The business class is still not able to recover from the losses they suffered due to the demonetization and now the consumers, the producers and traders are facing the consequences of clumsily introduced GST.  Now emboldened by the recent victories in the state elections, this government may   proceed enthusiastically with the Deposit Insurance Bill notwithstanding the stake holder’s fears and pleas and expert’s advice. After losing the credibility and confidence of the depositors can any bank function with profitability?  Too many surgical strikes may kill patients however, confident the doctor feels about his efficiency .