1. What is FRDI Bill? Here is all you need to know in 10 points

What is FRDI Bill? Here is all you need to know in 10 points

The Union Cabinet chaired by Prime Minister Narendra had approved the proposal to introduce a Financial Resolution and Deposit Insurance (FRDI) Bill in June this year. The bill was tabled in Lok Sabha in August and the Joint Committee of Parliament is expected to submit its report in the upcoming winter session of Parliament beginning 15 December.

By: | New Delhi | Published: December 7, 2017 12:41 PM
What is FRDI Bill, What is FRDI Bill 2017, frdi bill 2017, Financial Resolution and Deposit Insurance Bill, Financial Resolution and Deposit Insurance Bill 2017, what is Financial Resolution and Deposit Insurance Bill, Financial Resolution and Deposit Insurance Bill facts, Financial Resolution and Deposit Insurance Bill india, economy news, latest news The Union Cabinet chaired by Prime Minister Narendra had approved the proposal to introduce a Financial Resolution and Deposit Insurance (FRDI) Bill in June this year. (Source: PTI)

The Union Cabinet chaired by Prime Minister Narendra had approved the proposal to introduce a Financial Resolution and Deposit Insurance (FRDI) Bill in June this year. The bill was tabled in Lok Sabha in August and the Joint Committee of Parliament is expected to submit its report in the upcoming winter session of Parliament beginning 15 December. It is expected to pave way for a comprehensive resolution framework for specified financial sector entities to deal with bankruptcy situation in banks, insurance companies and financial sector entities, as per the statement given by the government. It also aims to strengthen and streamline the current framework of deposit insurance for the benefit of a large number of retail depositors. For those who still don’t know what is FRDI bill, here are 10 important points:

1. The bill was first brought to attention by Union Finance Minister Arun Jaitley in his 2016-17 budget speech. The senior BJP leader had said that a systemic vacuum exists with regard to bankruptcy situations in financial firms and that a comprehensive Code on Resolution of Financial Firms will be introduced as a Bill in the Parliament during 2016-17.

2. In March 2016, a committee was set up under the chairmanship of Ajay Tyagi, additional secretary, Department of Economic Affairs, Ministry of Finance, to draft and submit the Bill.

3. The draft of Financial Resolution and Deposit Insurance Bill 2017 was drawn up based on the recommendations of this committee.

4. The finance ministry, then, gave time until 31st October 2016 to given comments. After considering the suggestions, the Union Cabinet approved to introduction of FRDI Bill 2017 in the Parliament.

5. The Finance Ministry believes that the bill seeks to protect customers of financial service providers in times of financial distress.

6. The bill will also help to encourage discipline among the financial service providers by putting a limit on the use of public money to bail out distressed entities.

7. It seeks to decrease the time and costs involved in resolving distressed financial entities.

8. In order to strengthen the stability and resilience of the entities in the financial sector, a resolution corporation will be set up after the bill is enacted.

9. However, the FRDI Bill has received its share of criticism from various stakeholders for some of its controversial provisions including a ‘bail-in’ clause which suggests that depositor money could be used by failing financial institutions to stay afloat.

10. Another controversial inclusion is that the Resolution Corporation (rescue body) which is proposed under the Bill, can use your money in case the bank sinks. The bill empowers the rescue body to decide the amount insured for each depositor.

  1. T
    T S V Diwakar
    Dec 14, 2017 at 4:39 pm
    Day by day common man loosing confidence on Banks and on the Government. If it is so future is very difficult and dangerous for coming generations. Public revolution is a head.
    Reply
    1. M
      Mirza
      Dec 11, 2017 at 5:06 pm
      How the Indians was looted in British time bjp governament is also doing the same thing. Our PM says he is protecting the hard earned money of the people. Is this a way to do this ? This is really shameful we Indians has trust in Indian banking system but if this bill gets passed than the legendary trust will be breaked. Liberal Media and honest ministers should show their power and Should not get this bill appproved.
      Reply
      1. Santosh Ramalingam Bommireddipalli
        Dec 11, 2017 at 11:18 am
        THE TWO POINS THAT STAND OUT THAT SEND CHILLS UP SPINES OF PEOPLE - I NOTE ARE : 9. However, the FRDI Bill has received its share of criticism from various stakeholders for some of its controversial provisions including a ‘bail-in’ clause which suggests that depositor money could be used by failing financial ins utions to stay afloat. 10. Another controversial inclusion is that the Resolution Corporation (rescue body) which is proposed under the Bill, can use your money in case the bank sinks. The bill empowers the rescue body to decide the amount insured for each depositor.
        Reply
        1. M
          murthy
          Dec 11, 2017 at 8:16 am
          We trust banks as safe for depositing our hard earned money for kids education, marriages and survival on retirement. If banks are allowed to take away all that money for their mistakes it is a henious crime by the government towards lower and midle class. What wouldhappen id everyone prefers to close their bank accounts? Hope good sense will prvail on the government and desist from such a move
          Reply
          1. A
            Anil Vijapure
            Dec 9, 2017 at 9:36 pm
            The bill should be immediately scrapped. The bail in provision which can forcibly use the depositor's money for saving the financial ins ution, is absolutely barbaric in nature. That means the hard earned money of middle class will be equally looted by the big corporates as well as the rich farmers. There should be full public outcry against the bill to force the Government to completely withdraw it
            Reply
            1. N
              N s dhanamani
              Dec 8, 2017 at 7:48 am
              This has become a trend. Laws enacted to support corporates. Planned destruction of agriculture and common man economy. Feel like under british rule again. They are trying to create artificial famine and poverty.
              Reply
              1. S
                sujanbornini
                Dec 7, 2017 at 9:37 pm
                The british has gone physically, leaving their ghosts behind. The erstwhile british colony has become a ghost colony ruled by the anti people ghosts of british. We are ruled by centuries old british laws or some new fanged laws curbing the human rights which would shame the british. The british and the new rulers of India are two sides of same coin. The tail side is darker, without any scruples, morality, character and no accountability. So it is easy to understand why Kashmir and North East is bound within the geographical map of India on the tip of bayonet or front of jeep. Both Pakistan and India had changed dialectically from colony to colonial upon " independence" and fighting for the whole cake of Kashmir. FRDI bill is same as any anti Indian Economical laws passed by the british favoring the british capitalists and traders before "independence" The promise of the finance minister that the investor's interest will be protected is as hollow as a cat promising not to eat mice.
                Reply
                1. Yerram Raju Behara
                  Dec 7, 2017 at 1:17 pm
                  The Bill has potential risk for bank depositors. Government should have extended deposit insurance to deposits of up to Rs.2lakhs per person instead of Rs1lakh decided three decades back.
                  Reply
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