Bail-in clause formalises risk associated with deposits, say bank pensioners


The 'bail-in' clause in the Financial Resolution and Deposit Insurance (FRDI) Bill formalises the risk associated with bank deposits, says the All India Bank Pensioners’ and Retirees’ Confederation.

This would shake the confidence of the common man in banking and adversely affect the interest of pensioners and retirees, its representation to a Joint Parliamentary Commission (JPC) said.


The Bill has come as a rude shock for pensioners and retirees who are anguished that their hard earned money kept in bank deposits may evaporate due to ‘certain decisions’ by the government.

The real cause of worry lies in the bail-in clause with respect to failing financial institutions. It provides for the use of depositors' funds to shore up the financial condition of a failing institution.

“For us, this is a question of life and death. The balance lying in the S/B account should continue to be payable on demand,” the representation said.

Similarly, term deposits should be made payable in keeping with the terms and conditions of the account and under no circumstances should a portion of it or in full be converted into share or debenture.


The bail-in clause also includes a provision to cancel the liability owed by a specified service provider and also modify or change the form thereof. Bank deposits are a form of liability on which a bank has to pay interest. This change of form of liability might adversely affect the safety and security of funds kept as bank deposits.

The Confederation reminded the JPC that serving employees or retired personnel are in no way responsible for the huge burden of NPAs and the resultant provision to take care of such NPAs. A perusal of the list of the topmost defaulters of loans of any bank would reveal who exactly these persons are. This burden of can never be shifted onto the shoulders of present and former employees.

And in banks, pension fixed on the date of retirement remains frozen and the same is not revised with signing of the bipartite settlement, which normally revises wages/ salary of serving people.


Pensioners and retirees have been voicing their concerns in different forums to impress upon the need to update pension periodically. As pension is not upwardly revised, the retirees have to depend on the interest income of deposits kept by them mostly in those banks from where they have retired.

This deposited amount is mostly savings and superannuation benefits which they had saved to take care of their needs in their old age. The rate of interest on term deposits was declining and the real income of a pensioner was falling with every downward revision of interest. When a pensioner expires, he leaves an insignificant amount for his spouse or his successors.

“We thoroughly oppose the FRDI Bill in general and the bail-in clause in particular. We call upon all members of the JPC to see that the proposed bill is not passed in Parliament,” the representation said.

Published on December 14, 2017

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