Julio Ribeiro salutes two heros of the present crisis–

Two bright stars amid gloom

This is a tale of two IAS officers from Maharashtra. One is Iqbal Singh Chahal, hailing from Punjab, the son of a former Armoured Coarps officer, Lt Col MS Chahal, and the son-in-law of Ajit Singh Chatha, a former Chief Secretary of Punjab.

The other, Dr Rajendra Bharud, a tribal from the Bhil community, the son of a single mother who toiled in the fields of landowners to feed and educate her three children. He is presently Collector and District Magistrate of Nandurbar, a tribal-dominated district of Maharashtra, bordering Gujarat and MP. The Bhil community predominates in the triangle that comprises contiguous land traversing the three states.

But let me begin with Maharashtra’s CM, Uddhav Thackeray, whose positive leadership qualities enabled these officers to demonstrate theirs. When he installed Chahal as Municipal Commissioner of Mumbai, a post much coveted by the state’s senior bureaucrats, he told the officer that in the case of success in combating Covid, he (Chahal) should take all credit and feel free to speak to the media without looking over his shoulder for the CM’s approval. If, however, success eluded him, then the CM would take the rap and speak to the media. These are words and thoughts of a good leader. It is the duty of the political leadership to select the proper man for the right job and then leave the execution of the task to the one selected.

Chahal came with the reputation of cutting corners, at times, but getting the work done. Covid presented an opportunity to officers to prove their worth. People facing possible death want to know what you are going to do to give them hope and succour.

And that hope Chahal provided in ample measure. He assumed the mantle of the city’s Municipal Commissioner on May 8 and hit the ground running. He began with a mammoth meeting of his 24 ward officers and their seniors, many of them from the IAS, that very evening. The meeting lasted several hours, enabling the new MC to acquaint himself with the problems and the men and women who would be assisting him in the task of solving those problems.

He has emerged triumphant. The citizens of Mumbai have declared him a hero. Hard work, common sense and his father’s Army background all contributed to the success of his mission. The Control Room in his office was relieved of the thankless task of allotting beds. Twenty-four ‘war rooms’ were established in every municipal ward. Each of the wards had to keep track of the beds available on a daily basis and allocate them to patients in relation to the severity of each individual case. ICU beds with ventilators were assigned to the really bad cases and oxygen-hooked beds to those whose oxygen saturation level was below 92. Doctors were on duty in three shifts, their number having been supplemented by hiring 1,100 recently qualified medical graduates, each on a salary of Rs 50,000 per month. These young boys and girls are on an eight-hour shift in ambulances, 10 of which are on call in each war room at any one time. Nearly 800 Innovas were requisitioned and converted temporarily into ambulances. As the first point of contact in homes, these young doctors were to decide whether the patient required hospitalisation or whether he or she could be treated while at quarantine at home.

In short, Chahal restructured the entire Covid response mechanism and made it function as clockwork. He was ably assisted by a newly motivated staff. He is preparing for a third wave. Seven jumbo hospitals with a thousand beds each have been set up. Equipment, personnel, medicines, oxygen, etc., have been taken into account. The management of these hospitals will be entrusted to nearby private hospitals with established reputations. The idea is to associate the name of the well-known hospital with the new centre. All in all, a great job by a great son of India, and of Punjab! More power to his elbow.

The dedication to a task displayed by Chahal has found an echo in the achievements of Dr Bharud, a medical graduate selected for the IAS in 2012. This 33-year-old officer had to contend with primitive medical facilities and a population of 16 lakh, mostly illiterate or poorly educated, living in far-off villages and hamlets and lacking even simple mobile phones. He had to adapt to a system of communication that relied on physical contact through messengers. The villagers were reluctant to take the vaccination jabs and that was another job he was compelled to undertake — to educate his own people on the need for protection from the dreaded disease. He improvised, planned, and motivated his juniors and his might-have-been fraternity, the local doctors’ community, to rise to the occasion.

His exemplary work was brought to my notice by my friend and fellow activist, Shailesh Gandhi, who spent a few fruitful years with the Central government as a Central Information Commissioner appointed from the ranks of RTI activists. Shailesh intends to honour Dr Bharud in a virtual meeting later this month, where he has invited me to participate. It is important for citizens to acknowledge any exemplary work done by our public servants in order to motivate others of their ilk to work for the public good.

Dr Bharud’s district now has five oxygen plants installed in-house in the five hospitals spread over the district. It cost Rs 85 lakh to install each plant and it took just 10 days to construct each. The funds were available with the District Planning and Development Council. He recruited 200 doctors/nurses/ancillary staff to man the 2,000 extra beds he had added in the hospitals between the first wave and the second. He is ready for the third, should it strike.

Like I saluted Chahal, let me salute Bharud, another great son of a great country. While Chahal came with a small silver spoon in his mouth, Bharud is a shining example of what education and perseverance can do to lift the poor and the dispossessed out of the morass in which they are born.

: Julio Ribeiro

Cooperative housing societies will now have to pay GST on maintenance charges

GST Appellate Authority for Advance Rulings (AAAR), Maharashtra bench rules that activities of societies or clubs constitute ‘supply’ and is liable for GST

The GST Appellate Authority for Advance Rulings (AAAR), Maharashtra bench has upheld an earlier order of the GST Authority for Advance Rulings (AAR) that goods and services tax (GST) is to be levied on maintenance charges collected by cooperative housing societies if the monthly subscription or contribution charged from members is more than Rs 7,500 per month and the annual aggregate turnover is Rs 20 lakh or more.

It should be remembered that in July this year the Central Board of Indirect Taxes and Customs (CBIC) had said that a cooperative housing society will have to levy and collect GST (at the rate of 18%) on the total amount collected as maintenance charges, if it exceeds Rs 7,500 per month, per member. It had also noted that those societies with an annual turnover of more than Rs 20 lakh or less will not have to register under GST.

Smaller CHS with an annual turnover of Rs 20 lakh or less do not have to register under GST. Thus, they do not have any GST obligation, irrespective of the quantum of maintenance charges. The AAR had held the CHS’s activities towards its members have to be a ‘taxable supply’ under the GST laws

The South Mumbai society that had filed an appeal with the GST Appellate Authority for Advance Rulings (AAAR), Maharashtra bench had like other societies collected maintenance charges from its members such as water charges, electricity charges, property taxes, contribution to repair and maintenance fund, contribution to the sinking fund, car parking charges, interest on default charges as also property taxes.

The housing society had sought a clarification on whether these activities carried out by it amount to supply and whether they are liable to GST as also whether they are correctly discharging their GST liability for which invoices have been raised on the members of the society.

The South Mumbai housing society had contended that they were not carrying out any business in terms of Section 2 (17) of the CGST Act 2017 as they were a cooperative housing society and were not engaged in any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity.

The Maharashtra AAAR has upheld the AAR order and found that various activities are undertaken by the South Mumbai housing society, such as management, maintenance, administration of the society property amounts to supply.

It has held that provision of any facilities or benefits by a club, association or society to its members against a subscription or any other consideration would be construed as ‘business’ as per section 2 (17) of the CGST Act.

It has rejected the appellant’s contention to distinguish between commercial and a co-operative society on facts and also dismissed its submission that a particular transaction cannot be considered as business under Income Tax Laws by clarifying that Income Tax Act, 1961 is inapplicable under CGST Act, 2017.

It has also distinguished the society’s reliance on the SC judgment in the case of Calcutta Club, basis which the Appellant contended that a society can’t be said to be doing business with its members as both the society and its members are one and the same, owing to the common Principle of Mutuality.

It has held that under the CGST Act, 2017 “service” under CGST Act has been rendered a very wide connotation and “person” under section 2(84) includes both “incorporated and unincorporated clubs” and thus clarifies that “…both these deeming fictions…..convey the intention of the legislature to do away with the principle of mutuality…….”.

In a case concerning the Calcutta Club, the Supreme Court had in 2009 passed an order which dealt with the ‘principle of mutuality’ which meant that the the society and its members are not distinct entities and thus the activities of the CHS do not constitute a ‘supply’ and hence do not attract GST. It had said that the society’s charges cannot be treated as a ‘consideration’ under Section 2 (32) of the GST Act.

“In the present case the society is undertaking various sorts of activities that include the management, maintenance, administration of the society property, payment of various statutory taxes like payment of electricity bill of the common area of the society, water tax levied by the local authority along with organizing various social, cultural and recreational events for the members of the society against the contribution called society charges which can be reasonably construed as “consideration” in terms of Section 2 (31) of the CGST Act 2017.

It further said that looking at all these activities undertaken by the society for the benefit of its members, it is clear beyond doubt that under the provision of the CGST Act 2017, the appellant is doing “business” in terms of the definition provided under clause e of Section 2(17) of the CGST Act 2017.Also, since the appellant is providing services to its members against the consideration, named as “society charges” in the cause or furtherance of business, therefore, the activities would be construed as “supply” in terms of Section 7 (1) (a) of the CGST Act 2017 and accordingly be liable to GST, the order added.

“With the wide definitions of ‘supply’, ‘services’, ‘business’ under GST laws, it is no surprise that activities undertaken by residential welfare associations for their members have been held to be leviable to GST. It is to be noted that, presence of profit motive is no more a pre-requisite to make such transactions liable to tax,” said Harpreet Singh, Partner, Indirect Tax, KPMG.First Published on Nov 17, 2020 02:15 pm

Vandana RamnaniAssociate Editor, Real Estate|Moneycontrol News


This Netflix-Like Subscription Can Make Your Society Zero-Waste for Just Rs 180

“Once you subscribe with us, we own your waste. Right from the collection, segregation, recycling, and composting, our staff takes care of everything.”

Siva Sankar, the founder of Noval India, believes that India’s waste management sector is primarily taken care of by two factions — earth-friendly NGOs that rely on volunteers to keep the surroundings clean and mega projects by the government or private companies that treat the garbage.

With both factions, he sees a problem of long-term sustainability.

While there is always doubt on how long volunteers will keep the momentum going, the waste treatment plants by the government often do not run on full capacity or cannot be fitted everywhere due to space crunch.

In 2014, when the Central government had launched its flagship Swachh Bharat Abhiyan, many societies were asked to set up their composting units to treat wet waste at source to reduce the burden on landfills. Several municipal corporations had to introduce fines for societies (with more than 100 apartments) who refused to install the machine citing cost, maintenance and space issues.

Having experienced this first-hand, Siva, an alumnus of IIM Kozhikode, came up with a unique subscription model last October.

As per this model, any society from Pune, Mumbai, Bengaluru, and Kerala can subscribe to the Mumbai-based startup’s waste management services at a nominal cost of Rs 180 (per household) per month.

In return, you get a share of the revenue generated by selling compost and dry waste.

Noval was founded in 2014 to provide waste management solutions to societies, corporates, and educational institutions. Along with selling their machines, they also run the subscription model to suit people’s needs in a more feasible way.

“Once you subscribe with us, we own your waste. Right from the collection, segregation, recycling, and composting, our staff takes care of everything. We set up a couple of machines in your premises so that no waste goes outside the building,” Siva tells The Better India.

Under its model called ‘Green Lease’, the startup, which is registered under the Kerala Startup Mission, has signed the contract with 72 societies in different cities, 28 of which are presently using the services.

“Due to the lockdown, we had to halt our services. We service around 8,000 families and treat up to 12 tonnes of household waste daily,” he adds.

How This Model Works

The only criterion is to have 100 families living in your building. Noval’s largest customer is an apartment complex with 5,000 flats.

The machines, which are manufactured by Noval, don’t need much space. They can be fitted on the terrace as well, “For 150 households, we need an area of only 150 sq ft.”

The startup gives a seven-day free demonstration to the society, based on which the residential committee can sign the contract for a minimum of three years. However, the society has the option to discontinue at no cancellation charges with one month’s notice.

The startup then procures a NOC (no objection certificate) from the local municipal authority to set up the machines, including aerated composter, plastic shredder, incinerator and conveyor belt.

“The shredder shreds plastic waste, leaves and coconut waste. The composting machine converts wet waste into compost, and the incinerator treats sanitary waste. Meanwhile, the conveyor belt further segregates the dry waste into plastic, metal, and paper. We sell dry waste to local recyclers and compost to farmers. Half of the revenue is shared with the society members,” says Siva.

Though the machines run on power, they use minimal units to process the waste, “It takes ten units (Rs 70) to process 500 kilos of waste,” he adds.

Ronnie, a member of Purva Parkridge in Bengaluru, says, “We have 149 villas, and ever since we took the subscription in February this year, all our 100 kilos of waste is completely managed by Noval. This model certainly takes away the need for owning a compost machine and transfers the process to an open model with the experts.”

Besides helping societies go zero-waste, this one-of-its-kind model also generates jobs for informal waste pickers. The staff is hired on payroll and earn up to Rs 15,000 every month. This model ensures them a stable income and also provides a hygienic environment and dignity of labour.

“We are provided with a full-body PPE suit and gloves, and we come in contact with the waste for only a few minutes. The automatic machines take care of everything once we deposit the waste. It is a very safe and hygienic process that takes not more than two hours per society,” 45-year-old Asha Mohite, one of the operators from Mumbai, tells The Better India.

India generates nearly 62 million tonnes of waste every year, of which less than 50 per cent is recycled. With the mounting garbage crisis, solutions like the one provided by Siva and his team are not only feasible but also affordable.

Request for a free trial here.

(Edited by Shruti Singhal)


In Maharashtra, Co-op Societies Audit can be done by 31.12.2020 & AGM can be held by 31.3.2021

Annual General Body Can Be Held on or before before 31 03 2021 due to Corona. ALSO AUDIT FOR THE YEAR ENDEd 31 03 2020 TO BE DONE BY 31 12 2020.


जनसंपर्क कक्ष (मुख्यमंत्री सचिवालय)

मंत्रिमंडळ बैठक : दि. 23 जुलै 2020
एकूण निर्णय-4

सहकार विभाग

सहकारी संस्था अधिनियमात सुधारणा करण्यास मान्यता
लेखा परिक्षण, वार्षिक सर्वसाधारण सभेचा कालावधी वाढविण्याबाबत

महाराष्ट्र सहकारी संस्था अधिनियम 1960 मधील विविध कलमात सुधारणा करण्याचा निर्णय आज झालेल्या मंत्रिमंडळ बैठकीत घेण्यात आला. यानुसार कोरोनाच्या पार्श्वभूमीवर वार्षिक सर्वसाधारण सभेच्या कालावधीस आणि लेखा परिक्षणास मुदतवाढ देण्याची सुधारणा करण्यात येईल.

महाराष्ट्र सहकारी संस्था अधिनियम 1960 मधील कलम 27 मधील तरतुदीनुसार संस्थेच्या क्रियाशील सभासदांनाच संस्थेच्या निवडणूकीमध्ये मतदान करता येते. संस्थेचा क्रियाशील सभासद होण्यासाठी, काही किमान सेवा घेणे व 5 वर्षातून किमान एकदा वार्षिक सर्वसाधारण सभेस उपस्थित राहणे अपेक्षित आहे. मात्र कोरोना महामारीच्या प्रकोपामुळे कलम 75 मधील तरतूदीनुसार राज्यातील सहकारी संस्थांच्या वार्षिक सर्वसाधारण सभा दि. 30.09.2020 पर्यत घेणे शक्य नसल्याने संस्थांमधील सभासद अक्रियाशील होवून भविष्यात संस्थेच्या होणाऱ्या निवडणूकीत ते मतदार यादीतून वगळले जावून, मतदानापासून वंचित राहू शकतात. हे टाळण्यासाठी कलम 27 मध्ये सुधारणा करण्यास व सर्वसाधारण सभा घेण्याचा कालावधी वाढविण्यासाठी कलम 75 मध्ये अशी सभा घेण्यासाठी दिनांक 31.03.2021 पर्यंत मुदतवाढ देण्याबाबत सुधारणा करण्यास मान्यता देण्यात आली आहे.

तसेच कलम 81 मधील तरतुदीनुसार प्रत्येक संस्थेला वित्तीय वर्ष समाप्त झाल्यापासून 4 महिन्यांच्या कालावधीत आपले लेखापरीक्षण करून घेणे आवश्यक आहे. मात्र, सध्याच्या कोरोनाच्या साथीमुळे लेखापरिक्षण अहवाल दिनांक 31.07.2020 पूर्वी सादर करणे शक्य नसल्याने कलम 81 चे पोट-कलम 1 मध्ये लेखापरिक्षण अहवाल सादर करण्याच्या कालावधीत दिनांक 31.12.2020 पर्यंत मुदतवाढ करण्यासाठी उक्त कलमात सुधारणा करण्यास मान्यत देण्यात आली आहे.
कोव्हिड-19 या साथ रोगामुळे 250 पेक्षा कमी सदस्य संख्या असलेल्या सहकारी गृहनिर्माण संस्थांच्या निवडणुका पुढे ढकलण्यात आल्या आहेत. त्यामुळे ज्या गृह निर्माण संस्थांची पाच वर्षाची मुदत संपली असेल, अशा संस्थांवरील समिती सदस्य नवीन समिती अस्तित्वात येईपर्यंत नियमितपणे सदस्य म्हणून कायम राहाण्यासाठी कलम 154-ब चे पोट-कलम 19(3 मध्ये )तरतुद करण्यास मान्यता देण्यात आली.


Shared by Adv. VINOD SAMPAT

Why the new Consumer Protection Act is a Death Knell of Consumer Rights

Jehangir Gai

No matter how attractive or appealing something may look on paper, it is of no use whatsoever if it does not achieve its objective, and worse when it actually harms the very cause it is supposed to espouse. This is the case with the Consumer Protection Act 2019 which comes into effect from today, repealing the earlier enactment of 1986.

Let us look at the existing scenario. The District Consumer Forum which till now had a pecuniary limit of Rs 20 lakhs, are mostly located in premises which are too small, especially in urban areas where the filing of cases is more and there is a scarcity of adequate space. Consequently, files are spilling over even in corridors, and there is hardly any place for movement. The Forum is manned by just one or maximum two clerks, who find it difficult to cope with the existing work load of accepting complaints, scrutinising them, preparing and despatching notices, accepting of deposits and investing the money during the pendency of appeals, issuing certified copies of orders, etc.

Similarly, there is also a dearth of stenographers, and there is just one stenographer who has to sit on the dais during court hours to take dictation of daily proceedings of each case (known as the case roznama), and thereafter take dictation of judgments from the Presiding Officer as well as two members, Imagine the plight when there is just one steno between three persons. Consequently, judgments are invariably delayed, sometime by two to six months. Besides, when the steno proceeds on leave due to an illness or for some family occasion, the work of the forum comes to a grinding halt.

Read the full article at https://www.mxmindia.com/2020/07/why-the-new-consumer-protection-act-is-a-death-knell-of-consumer-rights/

Consumer Protection Act, 2019 notified with effect from 20 July, 2020

The main features of The Consumer Protection Act, 2019 are as follows:-

1. District forum is renamed as District Commission

2. The Opposite Party needs to deposit 50% of the amount ordered by District Commission before filing appeal before State Commission, earlier the ceiling was of maximum of Rs. 25,000/-, which has been removed.

3. The limitation period for filing of appeal to State Commission is increased from 30 days to 45 days, while retaining power to condone the delay.

4. State Commission shall have a minimum of 1 President and 4 Members

5. The original pecuniary jurisdiction of District Commission shall be uptil Rs. 1 Crore, State Commission from 1 Cr – 10 Cr. And NCDRC to be more than Rs. 10 crore

6. Now complainant can also institute the complaint within the territorial jurisdiction of the Commission where the complainant resides or personally works for gain besides what was provided earlier

7. Section 49(2) and 59(2) of the new act gives power to the State Commission and NCDRC respectively to declare any terms of contract, which is unfair to any consumer, to be null and void.

8. A second appeal to NCDRC has been provided U/s 51(3) if there is a substantial question of law involved in the matter

9. Power of revision can still be exercised by NCDRC U/s 58(1)(b) and by State commission under 47(1)(b) of the Act.

10. Power of review has been conferred to District Commission, State Commission and NCDRC U/s 40, 50 and 60 of the Act respectively

11. NCDRC can hear appeals against the order of Central Authority by virtue of Section 58 of the Act

12. Period of limitation in filing of complaint remains 2 years with a provision for condonation of delay power U/s 69 of the Act

13. Section 70 provides for administrative control of State Commission over District Commission and that of NCDRC over State Commission. It inter alia provides for investigation into any allegations against the President and members of a State Commission / District Commission and submitting inquiry report to the State Government concerned along with copy endorsed to the Central Government for necessary action

14. Section 71 confers power of execution as provided Under Order XXI, The Code of Civil Procedure, 1908 with such limitation as provided in the section

15. Mediation is given statutory status by way of introduction of Section 74 in the new Act

16. A product liability action may be brought by a complainant against a product manufacturer or a product service provider or a product seller, as the case may be, for any harm caused to him on account of a defective product.

17. Chapter III of the Act provides for creation of Central Authority to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers as a class

18. The Central Authority shall have an Investigation Wing headed by a Director General for the purpose of conducting inquiry or investigation under this Act as may be directed by the Central Authority

19. The Act of 2019 has come into effect w.e.f. 9.8.19 and old Act of 1986 stands repealed, subject to section 1(3) of the New Act.

20. Rules regarding appointment, conditions of service etc. of the Members are to be notified soon.

*The list is not exhaustive and the above is just a bird’s eye view only of the new Act. For more / exact details kindly refer to the notification dated 9.8.19 notifying the Act.

Consumer Protection Act, 2019 notification

Banking on legislation

The ‘bail-in’ clause, in a draft bill, would change the relationship between the customer and the bank

The recapitalisation of public sector banks (PSBs) through bailouts, be they as budgetary allocation or some sort of bond issue, has evoked much discussion. The Insolvency and Bankruptcy Code is cited as adequate punishment for defaulting borrower companies. However, under the code, the resolution process has brought little succour to banks as the recovery rate from defaulting companies has so far been merely 15-20% of the original amount lent. Meanwhile, there is no attempt so far by the Reserve Bank of India (RBI) to issue guidance to PSBs to blacklist these entities from getting further loans or prevent their managements from retaining a majority equity stake during the resolution process as penalty for the huge haircuts being taken by banks.

The result is that banks have been continually reporting losses in each successive quarter. Six PSBs have already been placed under prompt corrective action by the RBI. Even the State Bank of India was still stuck with non-performing assets worth ₹1,88,068 crore as on June 2017.

Deposits are at risk

According to the Financial Stability Board (FSB) Peer Review Report August 2016, 63% of the financial investments ordinary Indians make are within the banking system; PSBs account for 63% of the market share while private banks control 18%. Given the shaky financial condition of most public banks, deposits in these banks are very much at risk. In the best case scenario, there could be a government bailout. Other possibilities are the transfer of their assets and liabilities to a bridge service provider, a merger with an existing bank, or even liquidation. But none of these options guarantees safety of customer money.

What adds to the disquiet is the Financial Resolution and Deposit Insurance (FRDI) Bill, 2017 that was referred to a joint parliamentary committee this August after cabinet approval. This covers bankruptcy of businesses such as banks and insurance. Financial resolution includes solutions for banks facing ‘material’ or ‘imminent’ risk to viability depending on their capital and asset worth.

This Bill also introduces the provision for a “bail-in”, whose purpose is to provide capital to absorb the losses of a bank and ensure its survival. Here, survival does not mean safety of depositors’ money, but restoration of capital of the bank. The bail-in empowers the proposed Resolution Corporation to cancel a liability owed by the bank or change the form of an existing liability to another security.

All of us are aware that money in a savings or fixed deposit account is a liability owed by the bank to its customer. The bank promises to repay the money when demanded by the customer. Since the customer has not taken any security from the bank when handing over his money, legally, the customer is an unsecured creditor of the bank. With a ‘bail-in’, the bank simply refuses repayment of a customer’s money or instead issues securities such as preference shares (with no guarantee of fixed dividends) to a customer. This is in lieu of his deposits which are then used for recapitalisation of the bank.

The only money owed to depositors that cannot be bailed-in is the amount covered by deposit insurance. The Deposit Insurance and Credit Guarantee Corporation Act, 1961 which insured deposits worth one lakh for each depositor has been repealed by the cabinet. The FRDI Bill further empowers the Resolution Corporation to decide the amount insured for each depositor. Thus, it is possible that the insured amounts will not only vary for customers in different banks, but may also be different for different customers of the same bank.

No longer safe

The ‘bail-in’ clause changes the nature of relationship between the customer and the bank. It would mean that money is no longer safe in a bank. An account would lose its sovereign guarantee and instead become an investment. Putting away money in a bank would be akin to buying shares of a company or units of a mutual fund. The customer would need to monitor the level of toxicity of his bank with respect to its losses and accordingly keep switching bank accounts.

The banking saga has all the ingredients of a full-fledged Shakespearean tragedy. Out of the three protagonists, the government as the majority shareholder and the corporate borrower are wearing their victimhood as a badge of honour. Whereas, the real victim, the customer, is the unsung hero coerced into parting with his money.

The reality is that without customer deposits, a bank cannot carry on its business. It has to be understood that banking business is not the same as any other business. A bank customer cannot be treated on a par with an unsecured creditor of a regular business. The customer is not privy to the lending decisions in a bank unlike any vendor or investor dealing with a company. Hence the rules for bankruptcy of a regular business cannot be applied to bank failures. For the sake of justice and fairness to its citizens, the government must take a stand and defy the FSB’s diktat on the ‘bail-in’ clause.

by Meera Nangia who is Associate Professor in Commerce, University of Delhi