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HomeEnglishJaitley hints FRDI Bill will be reviewed.

Jaitley hints FRDI Bill will be reviewed.

Jaitley hints FRDI Bill will be reviewed.

Johnson Cherian.
Finance and Corporate Affairs Minister Arun Jaitley indicated that the controversial ‘bail-in’ clause in the Financial Resolution and Deposit Insurance (FRDI) Bill, 2017, that has spooked bank depositors about the safety of their savings, could be reviewed as part of the regular drafting process for new legislations.
Expected to be tabled in Parliament’s Winter Session, the Bill is aimed at resolving bankruptcy in banks, insurance companies and other financial establishments. The Bill proposes scrapping the Deposit Insurance and Credit Guarantee Corporation (DICGC), an RBI subsidiary that assures repayment of all bank deposits up to Rs 1,00,000 in case a stressed bank is liquidated.
There is ambiguity on how depositors’ savings will be protected in stressed banks and other financial entities under the new law, which also includes a ‘bail-in’ option to resolve financial entities’ stress. A bail-in option entails a bank issuing securities in lieu of the money deposited in its coffers.
When asked about the implications of this clause, Mr Jaitley said that the drafting process of the Bill is still underway. “The Bill still has to go through the overall drafting process. The Parliamentary committee can offer drafting suggestions, thereafter it will go back to the Cabinet,” he said.
“The Cabinet will place the recommendations in the public domain and ask for feedback. So I think a lot of corrections will take place,” Mr Jaitley said.
First introduced in the Monsoon Session of Parliament, the Bill was referred to a Joint Parliamentary Committee, whose report is expected in the upcoming session that begins on December 15.
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