Change in the Relation with the Bank

[Dudeperfect]

A bill called "The Financial Resolution and Deposit Insurance (FRDI) Bill, 2017" is passed in India.

If the draft bill gets the nod of Parliament, it will empower the Resolution Corporation to cancel a bank’s liability or alter it to another security. When we deposit money in a bank, in a savings or fixed deposit account, it is based on the promise that the bank shall return the money on demand. Essentially, any money you put in a bank is a form of an unsecured loan you give it.

However, with ‘bail-ins’, the banks would be empowered to simply refuse the repayment of the customer’s hard-earned money, or in some cases, issue securities like preference shares, in lieu of the money. These deposits would then be used for the recapitalisation of the ailing bank.

* Banking on legislation - The Hindu.

* Should Depositors Fear The New Financial Resolution & Deposit Insurance Bill?.

I am in the process of studying banking service regulations and legal framework of other countries. What's your opinion about such kind of move? Do you think such laws would force citizens to adopt the concepts like "Be your own bank  "

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[Kakmakr]

This just shows you to what length governments will go to protect Banks. They will fck over the poor people with dirty tricks like this and the poor people will only notice it, when it is too late. This is also a sign that something is going to happen with the Banking sector and the Banks and the governments are already preparing for that.

We saw the massive Bailouts to Banks with the last crisis and now they are creating a safety net for the next one. Banks are the sickness and Bitcoin the cure. ^grrrrrrr^

[steadyrice]

I've read the post a couple of times now, but I still couldn't wrap my mind around it. Why would I invest my money by creating an account in a bank, if I can't get my money back when I want it? This really goes against the definition of what a bank is.

[centralbanksequalsbombs]

A bill called "The Financial Resolution and Deposit Insurance (FRDI) Bill, 2017" is passed in India.

If the draft bill gets the nod of Parliament, it will empower the Resolution Corporation to cancel a bank’s liability or alter it to another security. When we deposit money in a bank, in a savings or fixed deposit account, it is based on the promise that the bank shall return the money on demand. Essentially, any money you put in a bank is a form of an unsecured loan you give it.

However, with ‘bail-ins’, the banks would be empowered to simply refuse the repayment of the customer’s hard-earned money, or in some cases, issue securities like preference shares, in lieu of the money. These deposits would then be used for the recapitalisation of the ailing bank.

* Banking on legislation - The Hindu.

* Should Depositors Fear The New Financial Resolution & Deposit Insurance Bill?.

I am in the process of studying banking service regulations and legal framework of other countries. What's your opinion about such kind of move? Do you think such laws would force citizens to adopt the concepts like "Be your own bank  "

This would hurt the banks' ability to compete to get deposits. Period. This would dissuade depositors of wanting to keep money at an Indian bank and would encourage offshore banking - say bye bye to money in India.

This ultimately ends up being counter-productive as the less deposits eventually leads to less capital for the banks!

LOL