My mother had an account with the Karur Vysya Bank (remember them?) and after much prodding, I agreed to update her passbook (remember them?) After rooting around in a musty Godrej almirah (remember them?) for an hour, I managed to locate an old passbook and took it to the nearest branch with the enthusiasm of a dutiful son. To be fair, I should admit this is an unaccustomed role, given my Mother's fierce independence.
"We don't do passbooks anymore," the woman at the counter informed me with the sneering contempt Apple users reserve for lesser mortals who have to make do with Androids. This was way back in 2005 and of course she didn't feel the need to explain why. Passbooks attract no fees and thus made the banks no profit. "Can you print out the balance on a slip of paper?" I asked with the optimism born of ignorance of Murphy's First Law of Banking. Never ask a banker to do anything that doesn't involve a fee, preferably a large one.
"Okay, so can I close the account and withdraw the remainder of the funds?" I asked tentatively. Again I was subjected to the exasperated furrow of the brow followed by the exaggerated shake of the head, in a manner reminiscent of the late Steve Jobs being asked to use Flash Macromedia. "Nil balance in the account now, monthly charges has been adjusted against your credit balance," she muttered finally.
"So how much are the charges that ate up all the money in the account without leaving enough to print me a receipt?" I asked more in sorrow than in anger before returning home empty-handed. Turns out Mom got away lightly, since things could have been much, much worse as they will be when the Financial Resolution and Deposit Insurance Bill 2017 is passed. Pensioners and those dependent on a monthly income from a fixed deposit are going to need a lot more than Restyl to go beddy-byes since the bill contains a lethal bail-in clause. Unlike a bail-out, where taxpayers' funds are used to save a failing financial institution, a bail-in uses depositors' funds to commit the crime. The clause includes a provision of "cancelling a liability owed by a specified service provider" or "changing the form of a liability owed" which is a weaselly, legal way of saying, "Up yours."
While fixed deposits were traditionally interest-incurring liabilities, these would now fallin the grey zone in the bank's balance sheet. The effrontery of the drafting committee is amazing, "A bail-in can be typically used in cases where it is necessary to continue the services of the ailing financial institution, but the option of selling it is not feasible." So basically what they are saying is, bankers are overpaid, underworked and inefficient, but they need to be kept afloat. As my old boss used to say when he encountered a ridiculous demand, "No, fair enough, inasmuch as, nevertheless, why?"
Leaving aside the meanness of the woman who denied me a fig-leaf to take back to Mummy, this bill is far more ominous. Meera Sanyal, former banker and political aspirant says, "FDRI has not been passed. However the draft bill contains a provision that would allow the Goverment to'nationalize our money to re-capitalize PSU banks.' This is both unjust and immoral and must be opposed and this provision deleted before the bill is passed."
Banks now have names that sound vaguely nationalistic, eg, State Bank of India, the banker to every Indian is the largest banking and financial services company by assets. Positioning themselves as "Banker to Digital India", their somewhat desperate attempt to jump onto the PM's digital bandwagon is pathetic when one realises that over 75% of our citizens have no broadband access. One is mystified by their full page print ads in leading news dailies celebrating a major milestone: the 5 million followers they claimed to have got on their Facebook page. Kim Kardashian, eat your heart out. While it may be rare is to find a brand prepared to burn good money on print ads to celebrate digital numbers, this is exceptionally bizarre. Especially when the same bank reported a 62% drop in Q3 profit because of rising bad loans of which a small but significant amount was converting corporate loans to Kingfisher Airlines into equity shares… we all know how much those are worth. Ah well, hopefully they can trade them in for UB shares or beer and then customers with frozen accounts can at least say, "Cheers."