When Banks Fail
A “bail-in” can be provided without undermining depositor interests
“Bail-in” refers to statutory power given to resolution authorities to convert existing creditors to shareholders. This has triggered fears that bank deposits, for instance, may not be safe. That need not be the case. An insured deposit cannot be bailed-in. India’s Rs 1 lakh deposit insurance has remained unchanged for years. It should be immediately enhanced to cover the size of most deposits. For remaining deposits, a “bail-in” provision should apply only after consent of the deposit holder which will have to be compensated with higher interest rates. It’s possible to simultaneously provide all resolution tools and safeguard depositor interests. That should be the focus of parliamentary debate on this legislation.
(Source: Time of India, 13 December 2017) more
“Bail-in” refers to statutory power given to resolution authorities to convert existing creditors to shareholders. This has triggered fears that bank deposits, for instance, may not be safe. That need not be the case. An insured deposit cannot be bailed-in. India’s Rs 1 lakh deposit insurance has remained unchanged for years. It should be immediately enhanced to cover the size of most deposits. For remaining deposits, a “bail-in” provision should apply only after consent of the deposit holder which will have to be compensated with higher interest rates. It’s possible to simultaneously provide all resolution tools and safeguard depositor interests. That should be the focus of parliamentary debate on this legislation.
(Source: Time of India, 13 December 2017) more
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Sir I have a simple question lLts say I have 5 lakh deposit with bank and bank goes insolvent and bail in is done will I get 1 lakh or 5 laksh? more
Dec 14
Hello! MOHIT PANDE , Sir , PSBs are state-actors . Public Sector Banks ( PSBs ) will fight tooth and nail ! They never fail or continue identically equal to one another. At the most , the doses of Merger / Amalgamation / Consolidation which are bitter medicines to them ever-since former Prime Minister , Vajpayee's s time , will be forced down their throats by the Centre . Today , Our PM has indicated that depositors' funds will remain 100% untouchable at all costs . No doubt about this . Because , any and all Nationalized Banks are the state-actors . The point is whether the PSBs should be deprived of their definition-function of Acceptance of Public Deposits henceforth . In fact , personally , I have canvassed for bifurcation of the Definition of Banking when I was in service before my retirement severally . Better to reform them as only Lending Subordinates to the People of India at the behest of the Centre but affiliated to the superintendence of the RBI ( Reserve Bank of India ) while forming a separate new establishment for Public Deposits taken away from the state-actors . 14/12/2017. more
Dec 14
“Bail-in” refers to statutory power given to resolution authorities to convert existing creditors to shareholders. more
Dec 13
