One of our readers Mr Vijay Oswal has written a thought-provoking comment on Rupee Bank crisis. We reproduce below his reaction for readers’ benefit-Editor
This is in Ref. With the article in the Times Of India Dated 4th September 2014 “RBI norms May Hit Co-op Depositors.”
Amusing as it may sound but this headline has successfully hit the millions of depositors and has safeguarded the interests of defaulters! The big question is we rather be a defaulter than a depositor?
As per the RBI guidelines the acquiring bank can forego proportional liabilities from the sick entity. A clear statement that depositors stand to lose their money without their consent in a situation if the co-op bank defaults. It’s a crude shock to depositors who have put in not just their hard earned money but also entrusted their faith in an institute that is supposed to be backed by the RBI. It’s like giving a free hold license to drive without licence or giving permission to copy in a classroom.
As depositors our hard earned money cannot be forgone for somebody else’s mishap. These banks have given loans to undeserving individuals and organizations where-in it’s a clear indication that they have unscrupulous intentions. The Top management of these banks have committed serious offence by granting undeserving loans which has directly Hit the depositors. Why should we pay for something that we are not responsible? The RBI cannot give away our money as if it is charitable money.
When we apply for a loan we accept the terms and conditions proactively and are ready to face the consequences for a default. In this case when we have not signed any such clause then how can the RBI decide to take away our money after the damage is done? It’s a clear case of conflict of interests where the depositors money is jeopardised to safe guard other interests.
Be it co-operative or nationalised, what’s the point in opening a bank account if the money is not safe and secure considering both are in the business only after the RBI’s approval. This is where we are feeding corruption and heading to a point of no return. As tax payers we feel betrayed. Considering the above example, then every defaulter of a bank should be given the levy to forego his liability. How can there be a different law for institute vs an individual!
The article also states “In its latest circular, the RBI has said that under the new guidelines, the acquiring bank should not incur any loss arising out of the said merger or transfer of assets and liabilities of cooperative banks”
These guidelines should have been formed beforehand and not after the damage is done. As a depositor we feel we have no rights over our own money. The govt expects us to pay the taxes irrespective of whether we have the liquidity. Just as it’s a mandate to pay the taxes because that’s our liability similarly the financial institutes should also be liable to pay.
A depositor’s money is a right and not an obligation.