Moneycontrol
Dec 07, 2017 12:44 PM IST | Source: PTI

Govt committed to protecting rights of depositors: Arun Jaitley on FRDI Bill

The bill has received flak from stakeholders on some of the provisions. This includes a 'bail-in' clause according to which depositors' money in banks can be used to rescue failing financial institutions.

To ease the worries over provisions in the Financial Resolution and Deposit Insurance (FRDI) Bill, Finance Minister Arun Jaitley said the proposed bill protects the rights of depositors.

"The Financial Resolution and Deposit Insurance Bill, 2017 is pending before the Standing Committee. The objective of the government is to fully protect the interest of the financial institutions and depositors," he said in a tweet.

The government stands committed to this objective, he added.

The bill has received flak from stakeholders on some of the provisions. This includes a 'bail-in' clause according to which depositors' money in banks can be used to rescue failing financial institutions.

No specific deposit insurance amount is also a point of contention among the stakeholders. Currently, all deposits of up to Rs 1 lakh are insured under the Deposit Insurance and Credit Guarantee Corporation Act.

Congress and CPM have termed the bill as anti-people as savings of people will be used to save the failing banks. The parties have red-flagged the Section 52 of the proposed bill, which is likely to be passed in the Winter Session of the Parliament, commencing on December 15.

The government tabled the Financial Resolution and Deposit Insurance Bill, 2017 in August in the Lok Sabha, which was referred to a Joint Committee of Parliament.

The bill seeks to deal with insolvency of financial service providers.

The bill provides for establishment of a resolution corporation with powers relating to transfer of assets to a healthy financial firm, merger or amalgamation, liquidation to be initiated by an order of the National Company Law Tribunal.

The Bill proposes to protect the existing rights of the depositors, Economic Affairs Secretary S C Garg told PTI.

"There is no dilution thereof. Instead it enhances present protections in certain ways. Principal guarantee for PSU Banks' depositors come from government ownership which also remains completely unaffected," Garg said.

(With inputs from PTI)
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