Bill that had bank customers jittery withdrawn: 10 facts

NEW DELHI: The FRDI or Financial Resolution and Deposit Insurance Bill was introduced via the federal government in Lok Sabha nearly a 12 months back. Amid rising considerations about the 'bail-in' clause and "various reasons", the federal government on Tuesday determined to withdraw the Bill from the lower space of Parliament.

Experts believed that the 'bail-in' clause had potential to harm deposits in financial savings bank accounts.

Here are 10 things to grasp about the adventure of the FRDI Bill:

1. The Bill was introduced on August 10, 2017 within the House and then referred to the joint committee of Parliament.

2. 'Bail-in' clause: The clause were incorporated within the Bill as one of the vital tools for solution for bank failure. It supplied for depositors to endure a part of the cost of the solution via a corresponding aid in their claims. This provision had raised considerations that deposits may well be used to bail out failing banks.

3. In December remaining 12 months, then finance minister Arun Jaitley had asserted that the federal government was committed to protective the interests of depositors in public sector banks (PSBs).

4. In January, economic affairs secretary Subhash Chandra Garg had mentioned that makes an attempt to create scare referring to bail-in had been totally unfounded. "70 per cent deposits are in PSBs. Most remaining deposits are in well capitalised and sound private banks. No likelihood of bail in for over 98 per cent of depositors. Remaining also subject to bail in if the depositors consent," he had tweeted.

5. The FRDI Bill also proposed to create a framework for overseeing of financial establishments corresponding to banks, insurance companies, non-banking financial companies (NBFCs) and inventory exchanges in case of insolvency. The 'Resolution Corporation', proposed within the draft Bill, was to look after the process and save you the banks from going bankrupt. It would have performed this via "writing down of the liabilities", a phrase some interpreted as a 'bail in'. The draft Bill empowered the Resolution Corporation to cancel the legal responsibility of a failing bank or convert the character of the legal responsibility.

6. The Bill also proposed elevating the safety quilt for bank deposits. At provide, every depositor is safe only up to Rs 1 lakh via the Deposit Insurance and Credit Guarantee.

7. Due to controversies over the 'bail-in' clause, the committee sought views of a number of stakeholders, together with the Reserve Bank of India (RBI) and trade our bodies. While briefing the panel, RBI Governor Urjit Patel had expressed considerations in regards more than a few provision of the Bill associated with criteria for chance classification, information sharing between regulators and Resolution Corporation, amongst others.

eight. Union minister Piyush Goyal, who may be in-charge of the finance ministry till Arun Jaitley recuperates from a kidney transplant, had knowledgeable the joint committee that: "The stakeholders together with public have raised apprehensions on the subject of the provisions of the FRDI Bill, like using bail-in software to unravel a failing bank, the adequacy of deposit insurance quilt and the felt wish to revive the insurance limits considerably, and application of solution framework for public sector banks.

"Resolution of these issues will require a comprehensive examination and reconsideration. It is, subsequently, appropriate that the Bill is also withdrawn," he added.

nine. The committee, headed via Bhupender Yadav, agreed with the proposal of the federal government to withdraw the Bill.

10. A suggestion to withdraw the Bill was lately moved via minister of state for finance Pon Radhakrishnan and was licensed via the House.

(With inputs from PTI)
Bill that had bank customers jittery withdrawn: 10 facts Bill that had bank customers jittery withdrawn: 10 facts Reviewed by kailash soni on August 07, 2018 Rating: 5
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