Indian government is about to pass FRDI (Financial Resolution and Deposit Insurance) bill. Once this bill is passed, then if a bank incurs losses, the losses will be passed to the depositors.
Let us take an example: Let us say Bank-A has lot of NPAs (non-performing assets). Now, instead of share-holders (usually government for most banks) bearing the losses, as per the new FRDI bill, the depositors will have to bear the losses i.e. all deposits in the bank will be used to compensate for the NPAs. So if I have money in my savings a/c and fixed deposits in Bank-A, and Bank-A makes huge losses; then I will lose my money, even-though it was no fault of mine that the bank lost the money.
How to protect our savings from this bail-in? Keep minimum amounts in banks.
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