{"id":33487,"date":"2018-10-30T12:35:22","date_gmt":"2018-10-30T07:05:22","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=33487"},"modified":"2018-10-30T12:35:22","modified_gmt":"2018-10-30T07:05:22","slug":"bail-in-doubts","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/bail-in-doubts\/","title":{"rendered":"Bail-in doubts"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/opinion\/editorial\/bail-in-doubts\/article21261606.ece\"><strong>Bail-in doubts<\/strong><\/a><\/p>\n<p><strong>Context<\/strong><\/p>\n<p>The government needs to re-\u00adexamine the proposed financial resolution legislation<\/p>\n<p><strong>Concerns about Bail-in clause<\/strong><\/p>\n<p>Introduced in Parliament this August, it has caused great anxiety about the safety of funds parked by millions of households in bank deposits \u2014 fears that it will enable banks to be \u2018bailed in\u2019 by depositors\u2019 funds rather than being \u2018bailed out\u2019 by taxpayers (or potential buyers)<\/p>\n<p><strong>Recapitalisation<\/strong><\/p>\n<p>The government has promised a \u20b92.11-lakh crore recapitalisation plan for public sector banks that are now taking haircuts on defaulted loans being put through the Insolvency and Bankruptcy Code. When banks, in turn, face collapse, the fear is that depositors could face similar haircuts or write-downs on the value of their savings in the bank and perhaps be issued securities instead<\/p>\n<ul>\n<li><strong>Rationale for this provision<\/strong>:This provision in the FRDI Bill is purportedly with an eye on resolving bankruptcy scenarios among financial entities, some of which could be too big to fail or systemically important.<\/li>\n<\/ul>\n<p><strong>Finance minister\u2019s view<\/strong><\/p>\n<p>A lot of corrections\u2019 could still take place; the Bill is currently being reviewed by a parliamentary committee whose report will be considered by the Cabinet<\/p>\n<p><strong>Global debate over bail-in clause<\/strong><\/p>\n<p>As a resolution tool for stressed financial firms, the bail-in clause has been the subject of much debate, but it remains the least well-established across the world. Even the committee framing the FRDI law has noted that it should typically be used where continuing a firm\u2019s services is considered vital but its sale is unviable \u2014 not as a lazy default option. If lenders don\u2019t believe that a bail-in plan would salvage a firm, triggering the clause could end up causing a run on the bank instead of preventing one<\/p>\n<p><strong><u>PS<\/u><\/strong>: Provisions of the FRDI Bill has already been discussed in earlier briefs<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bail-in doubts Context The government needs to re-\u00adexamine the proposed financial resolution legislation Concerns about Bail-in clause Introduced in Parliament this August, it has caused great anxiety about the safety of funds parked by millions of households in bank deposits \u2014 fears that it will enable banks to be \u2018bailed in\u2019 by depositors\u2019 funds rather&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/bail-in-doubts\/\">Continue reading <span class=\"screen-reader-text\">Bail-in doubts<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-33487","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704943638},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/33487","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=33487"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/33487\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=33487"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=33487"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=33487"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}