NEW DELHI: The Financial Resolution and Deposit Insurance Bill, 2017 (FRDI Bill) goes beyond the current provisions to provide greater protection to depositors, the finance ministry has said defending the Bill that has raised apprehensions in some quarters.
The statement follows concerns regarding "bail-in" provisions of the Bill. "The provisions contained in the FRDI Bill, as introduced in the Parliament, do not modify present protections to the depositors adversely at all. They provide rather additional protections to the depositors in a more transparent manner," the statement said clarifying the provisions. Introduced in the Lok Sabha on August 10, the Bill is presently under the consideration of a joint committee of Parliament, which is consulting all the stakeholders on the provisions of the proposed legislation. The claim of depositors will be further strengthened as the FRDI Bill raises the order of priority for uninsured deposits above than unsecured creditors, central and state governments, a government official told ET.
"The objective of the Government is to fully protect the interest of the financial institutions and the depositors. The Government stands committed to this objective," finance minister Arun Jaitley had tweeted.
The statement follows concerns regarding "bail-in" provisions of the Bill. "The provisions contained in the FRDI Bill, as introduced in the Parliament, do not modify present protections to the depositors adversely at all. They provide rather additional protections to the depositors in a more transparent manner," the statement said clarifying the provisions. Introduced in the Lok Sabha on August 10, the Bill is presently under the consideration of a joint committee of Parliament, which is consulting all the stakeholders on the provisions of the proposed legislation. The claim of depositors will be further strengthened as the FRDI Bill raises the order of priority for uninsured deposits above than unsecured creditors, central and state governments, a government official told ET.
"The objective of the Government is to fully protect the interest of the financial institutions and the depositors. The Government stands committed to this objective," finance minister Arun Jaitley had tweeted.
At present, bank depositors can be only protected to a limit of Rs 1lakh by the guarantee of Deposit Insurance and Credit Guarantee Corporation (DICGC), and remaining deposits over Rs 1 lakh are treated at par with claims of unsecured creditors, and in the event of liquidation of a bank, such depositor claims are only paid after preferential payments are made.
The FRDI Bill seeks establishment of a Resolution Corporation for protection of consumers. Deposit insurance powers and responsibilities will be transferred to the Resolution Corporation. "The FRDI Bill is far more depositor friendly than many other jurisdictions, which provide for statutory bail-in, where consent of creditors / depositors is not required for bail-in," the finance ministry's statement observed.
The FRDI Bill seeks establishment of a Resolution Corporation for protection of consumers. Deposit insurance powers and responsibilities will be transferred to the Resolution Corporation. "The FRDI Bill is far more depositor friendly than many other jurisdictions, which provide for statutory bail-in, where consent of creditors / depositors is not required for bail-in," the finance ministry's statement observed.
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