Skip to main content

"Dangers" of privatizing public sector banks loom large, even if Govt of India may have withdrawn FRDI Bill

Counterview Desk
A public statement, released jointly by Soumya Dutta of the All-India Bank Officers’ Confederation, Priya Dharshini of the Centre for Financial Accountability, Madhuresh Kumar of the National Alliance of People’ Movements, and Gautam Mody of the New Trade Union Initiative, has argued that, while the Government of India has withdrawn the controversial Financial Resolution and Deposit Insurance (FRDI) Bill, only a batter has been but won the “war looms at large”.

Text of the statement:

On August 7, 2018, a year after its introduction, the BJP government withdrew the Financial Resolution and Deposit Insurance (FRDI) Bill. Aimed at destroying public sector banks and endangering the public interest, FRDI was introduced last year on August 10.
Its withdrawal was achieved after strong opposition from trade unions, especially those of the financial sector, people’s movements, civil society organisations and sections of the middle class. This is a major defeat for the BJP government comparable to the reversal of the Land Acquisition Bill in 2014.
In the last four years, the BJP government has rammed through many anti-people policies and laws while undermining its democratic processes. The FRDI Bill too was sought to be passed in similar fashion, but the collective effort of the progressive organisations and sections of the middle class forced the BJP to retreat.
The BJP government justified the withdrawal citing the ‘apprehensions’ of stakeholders, including the public about various clauses of the Bill like bail-in and inadequacy of deposit insurance. Further, it argued that comprehensive reconsideration of these issues would require time.
This only highlights the BJP’s arrogance and lack of concern when dealing with legislation that could potentially impair the entire financial system of the country. The FRDI bill was introduced without any public debate. Ignoring parliamentary opposition’s demands for the referral to a Parliamentary Standing Committee, the Bill was instead sent to a Joint Committee.
While drafting the Bill, the BJP government borrowed extensively from a report of the Financial Stability Board, an international body consisting of G20 countries called the “Key Attributes of Effective Resolution Regimes for Financial Institutions”. This report was prepared after the fallout of the 2008 financial crisis and proposed measures to avert another such crisis.
Tailored for a banking sector dominated by private parties where banks and other financial institutions engaged in rampant speculative activities, the report had little concerning a banking sector like India’s where publicly owned entities catered primarily to small depositors, pensioners and working-class savings.
Refusing to recognize these fundamental differences, the BJP government tried imposing FRDI without analysing the potential impact it would have on the economy and the savings of people. This Bill if enacted would have completely undermined the RBI and other regulatory bodies, concentrating executive power in a Resolution Corporation (RC).
The RC would have powers to sell, merge and liquidate Financial Institutions including PSBs. And the Bail-in clause would have deprived people of their hard-earned deposits to pay for banks losses stemming from corporate defaults.
Finance Minister Piyush Goyal said that withdrawal does not mean the end of the bill and that the BJP would bring it back in a new form. He insisted that the Bill is an inevitable necessity to resolve the banking crisis. But at the core of this crisis lies a mountain of corporate debt and capital-strapped banks.
These issues persist even today, fuelled and fanned by the BJP government’s botched attempts at banking reform and ideological refusal to recapitalize PSBs. Unless the PSBs are recapitalized, debt recovery mechanisms strengthened, lending practices improved and wilful defaulters penalized, there cannot be a long-term solution for the crisis of bad loans.
Any attempt to ‘reform’ banks without recapitalization and curbing the lax banking practices that led to the crisis is only an effort to weaken the public sector banks and is tantamount to privatisation. Hence, we must be vigilant against any renewed attempt to impose this Bill and its clauses in any shape or form by the BJP or any other government. As mentioned before, this significant defeat is due to a concerted effort by a large number of people and organisations, coming from diverse sections and strata of the society.
From sending numerous submissions to the Joint Committee, helping to organise public meetings on the dangers of FRDI Bill in various regions across the country, sending online letters to MPs requesting them to take a position against the FRDI Bill and contributing to bringing out a critique of FRDI “Wrong Diagnosis, Harmful Prescription: A Critique of Financial Resolution and Deposit Insurance (FRDI) Bill, 2017”, the coordinated, timely and consistent effort played a big role in defeating the FRDI Bill.
We also acknowledge the efforts taken by the banking unions in calling nationwide strikes, meeting the finance minister, members of the standing committee on finance, leaders of the opposition, meeting MPs, making presentations to the joint committee, and galvanising support of parliamentarians.
This also resulted in the opposition parties, including from the left, questioning the Bill and its clauses. What must also be reiterated is that the FRDI Bill is only one in the long list of the BJP government’s attempts to destroy and privatise public sector banks.
Pushing back FRDI is only a small step towards strengthening public sector banks. More organisations and people must engage with finance and financial institutions as it is only with constant monitoring of the changing financial situation and policies and through public actions that the proper functioning of Indian banking and the PSBs can be ensured and privatisation resisted. Transparency and accountability are absolutely necessary in banking, it is public money after all.

Comments

TRENDING

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

How lead petitioner was rendered homeless when GM mustard matter came up in SC

By Rosamma Thomas*  On January 5, 2023, the Supreme Court stayed a December 20, 2022 direction of the Uttarakhand High Court to the Indian Railways and the district administration of Haldwani to use paramilitary forces to evict thousands of poor families occupying land that belonged to the railways.  Justice AS Oka remarked that it was not right to order the bringing in of paramilitary forces. The SC held that even those who had no rights, but were living there for years, needed to be rehabilitated. On December 21, 2022, just as she was getting ready to celebrate Christmas, researcher Aruna Rodrigues was abruptly evicted from her home in Mhow Cantonment, Madhya Pradesh – no eviction notice was served, and nearly 30 Indian Army soldiers bearing arms were part of the eviction process. What is noteworthy in this case is that the records establishing possession of the house date back to 1892 – the title deed with the name of Dr VP Cardoza, Rodrigues’ great grandfather, is dated November 14

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Savarkar 'criminally betrayed' Netaji and his INA by siding with the British rulers

By Shamsul Islam* RSS-BJP rulers of India have been trying to show off as great fans of Netaji. But Indians must know what role ideological parents of today's RSS/BJP played against Netaji and Indian National Army (INA). The Hindu Mahasabha and RSS which always had prominent lawyers on their rolls made no attempt to defend the INA accused at Red Fort trials.

Tax buoyancy claims when less than 4% Indian dollar millionaires pay income tax

By Prasanna Mohanty  In FY18, the last year for which disaggregated income tax data is available, only 29,002 ITRs declared income above Rs 5 crore, while Credit Suisse said India had 7.25 lakh dollar millionaires (the wealth equivalent of Rs 8 crore and above) that year. Often enough, the Centre claims that demonetization in 2016 raised tax collections, improved tax efficiency, and expanded the tax base. Now RBI Monetary Policy Committee (MPC) member Ashima Goyal has also joined their ranks, attributing the “claims” of rising tax collections in the current fiscal year to “tax buoyancy” brought by the demonetisation . Do such claims have any basis in official records? The answer is unequivocal. The budget documents show the tax-to-GDP ratio (direct plus indirect tax) increased from 10.6% in FY16 (pre-demonetization) to 11.2% in FY17, remained there in FY18 (demonetization and GST fiscals), and then fell to 9.9% in FY20. In FY22, it improved to 10.8% and is estimated to drop to 10.7% in

Cyrus Mistry, PM Modi’s brother: What do these accidents have in common? Merc!

By Rosamma Thomas*  In September 2022, in an accident at Palghar near Mumbai, Cyrus Mistry, former chairman of the Tata Group, died in a road accident . On December 28, 2022, a road accident in Mysore left one of Prime Minister Narendra Modi’s brothers injured. What is common in these accidents? The car that crashed into the divider on the road, in both these cases, was manufactured by “prestigious” German manufacturer Mercedes Benz. One former dealer of Mercedes Benz cars in India has been raising issues of the threat to the lives of those riding these cars for many years now. Cama Motors, among the oldest dealers of foreign cars, having started business in pre-independence India, noted over 10 years ago that Mercedes Benz was indulging in corrupt practices . The cars are currently priced between Rs 41 lakh and Rs 2.92 crore in India; few people realize that the pride of owning a Merc comes at considerable risk to life. Cama Motors carefully documented several of the flaws on a websi

Gandhian unease at Mahadev Desai book launch: Sabarmati Ashram may lose free space

By Rajiv Shah  A simmering apprehension has gripped the Gandhians who continue to be trustees of the Sabarmati Ashram: the “limited freedom” to express one’s views under the Modi dispensation still available at the place which Mahatma Gandhi made his home from 1917 to 1930 may soon be taken away. Also known as Harijan Ashram, a meeting held for introducing yet-to-be-released book, “Mahadev Desai: Mahatma Gandhi's Frontline Reporter”, saw speaker and after speaker point towards “narrowing space” in Gujarat for Gandhians (as also others) to express themselves. Penned by veteran journalist Nachiketa Desai, grandson of Mahadev Desai, while the book was planned to be released on January 1 and the meeting saw several prominent personalities, including actor-director Nandita Das, her scholar-mother Varsha Das, British House of Lords member Bhikhu Parekh, among others, speak glowingly about the effort put in for bringing out the book, exchanges between speakers suggested it should be rele

Civil rights leaders allege corporate loot of resources, suppression of democratic rights

By Our Representative  Civil rights activists have alleged, quoting top intelligence officers as also multiple international forensic reports, that recent developments with regard to the Bhima Koregaon and the Citizenship Amendment Act-National Register of Citizens (CAA-NRC) cases suggest, there was "no connection between the Elgaar Parishad event and the Bhima Koregaon violence." Activists of the Campaign Against State Repression (CASR) told a media event at the HKS Surjeet Bhawan, New Delhi, that, despite this, several political prisoners continue to be behind bars on being accused under the anti-terror the draconian Unlawful Activities (Prevention) Act. Addressed by family members of the political prisoners, academics, as well as social activists, it was highlighted how cases were sought to be fabricated against progressive individuals, democratic activists and intellectuals, who spoke out against "corporate loot of Indian resources, suppression of basic democratic

Kerala natural rubber producers 'squeezed', attend to their plight: Govt of India told

By Rosamma Thomas   Babu Joseph, general secretary of the National Federation of Rubber Producers Societies (NFRPS) at a recent discussion at Mahatma Gandhi University, Kottayam, explained that it is high time the Union government paid greater heed to the troubles plaguing the rubber production sector in India – rubber is a strategic product, important for the military establishment and for industry, since natural rubber is still used in the manufacture of tyres for large vehicles and aeroplanes. Synthetic rubber is now quite widespread, but styrene, which is used in making synthetic rubber and plastics, and also butadiene, another major constituent of synthetic rubber, are both hazardous. Prolonged exposure to these even in recycled rubber can cause neurological damage. Kerala produces the bulk of India’s natural rubber. In 2019-20, Kerala’s share in the national production of rubber was over 74%. Over 20% of the gross cropped area in the state is under rubber cultivation, with total

Bangladesh 'rights violations': US softens stance, fears increased clout of China, India

By Tilottama Rani Charulata*  In December 2021, in addition to the Rapid Action Battalion (RAB), the United States imposed sanctions on seven former and current officers of the force, alleging serious human rights violations. Benazir Ahmed and former RAB-7 commander Miftah Uddin Ahmed were banned from entering the US. RAB as an institution was also canceled the support it was getting from the US and its allies. At the same time, those under the ban have been notified of confiscation of assets held abroad. The anti-crime and anti-terrorism unit of the Bangladesh Police, RAB is the elite force consisting of members of the Bangladesh Army, Bangladesh Police, Bangladesh Navy, Bangladesh Air Force, Border Guard Bangladesh, Bangladesh Civil Service and Bangladesh Ansar, and has been criticized by rights groups for its use of extrajudicial killings and is accused of forced disappearances. The government of Bangladesh has been insisting about lifting the ban on RAB, but the US had till recen