Several Founders, Co-Founders, CXO Bankers, CXO Fintech professional & people who participated in the ePanel discussions:
- Dr. R Bhaskaran, Strategic Training Advisor in Banking & Finance
- Mr. Bipin Kabra, Co-Founder at Eunoia Financial Services Pvt Ltd
- Mr. Hemal Shah, Technical Product Manager, Mastercard
- Mr. Fareed Jawad, Vice President – Product development, Spreedly
- Mr. Ajay B Panicker, CEO & Founder, NetPay Limited
- Mr. Sharad Goklani, CTO at Equitas Small Finance Bank
- Mr. Raghu Veer Dendukuri, Founder, Ideal Nation
- Mr. Vikas R Panditrao, Co-Founder, Forum of Industry and Academic Knowledge Sharing (FIAKS)
- Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum requested to remain anonymous
FIAKS community questioned the classification of few banks by regulators as TOO BIG TO FAIL. Further questioned, Why are Regulatory authorities silent on such acts of the banks stated below:
Act 1: Banks are using the stamp on passbook and declaring that they are not liable to take responsibility over One Lakh. So does this mean that saving in these banks beyond one lakh is unsafe? Check the image below
Act 2: When you ask from these banks “signature verification” or any “document attesting” they put a stamp as a disclaimer stating ” signed without any responsibility on the part of the bank or the person signing it“. So are such banks trustworthy?
First of all, let’s simply address what are these ‘too big to fail banks’. These banks are so large that the entire economy would be disturbed if they failed and hence supported by the government when they face potential failure.
Now let’s reflect upon the concerns raised above;
- As far as a stamp on passbook is concerned, this will make depositors aware that bank deposits may be safe but not fully secure. The deposit insurance limit is too low. Going forward banks could offer a higher rate of interest on uninsured deposits. And talking about the benefits to this extent CAR (capital adequacy ratio) can come down, KYB (Know Your Bank) will be automatic as depositors will choose less risky banks. The interest in uninsured deposits will be almost as the rating of banks. For instance, the ROI on savings given by Kotak bank i.e. 4% for balance up to Rs. 1 lakh, 6% for balance above 1 lakh but below 10lakh. Another member said that what is surprising is that SBI pays lesser interest on balance above Rs. 1lakh.
- In fact, RBI has mandated banks to incorporate information about deposit insurance cover along with the limit of coverage upfront in the passbooks. Here is the circular
Now let’s cater to the question of the trustworthiness of such banks: Register and Read the entire article