New Delhi, Dec 10 Terming the Financial Resolution and Deposit Insurance (FRDI) Bill as a "blatant attack on crores of common depositors who put their lifelong earnings in banks", the CPI-M on Sunday said that it would fight against the proposed legislation tooth and nail in Parliament.
It said it would seek other parties' support too in order to thwart the Bill that seeks to "protect both the banks facing collapse and the corporates who have heavily borrowed from the banks".
"The banks have given humongous loans to corporates which are not being returned. The consequent loss to the banks is being sought to be made up through savings of crores of depositors," the Communist Party of India Marxist (CPI-M) said.
It said the proposed bill "falls in line with the recommendations of international finance capital" which prescribes that in order to prevent any future 2008-like global financial meltdown, banks and financial institutions must ensure a process of "bail in" rather than "bail out".
"The huge bail out packages given by various governments to banks and financial institutions to overcome the global crisis of 2008 converted corporate insolvencies into sovereign insolvencies. This has created a new crisis for global capitalism and this continues to plague the global economy," the Left party said.
The FRDI Bill -- already introduced in the Lok Sabha in the monsoon session and referred to a Joint Parliamentary Committee (JPC) -- establishes a Resolution Corporation to monitor financial firms, anticipate risk of failure, take corrective action and resolve them in case of such failure.
The resolution may be done either by merger or acquisition; transferring the assets, liabilities and management to a temporary firm; or liquidation.
Calling liquidation the "bail in" process, the CPI-M said if it becomes law, it would grant the Resolution Corporation power "to ensure that a failing bank can be recapitalized with depositors money and material without their consent".
"There is no guarantee for protecting the depositors' money. The CPI-M will oppose this legislation in parliament in the current form and will seek the support of all other parties to do the same in the interests of tens of crores of our people whose life long savings are jeopardised," it said.