Finance Minister Arun Jaitley has once again spoken in favour of the proposed FRDI Bill for protecting the rights of depositors. Touted as the bill to protect the existing interest of institutions and depositors, Finance Minister Arun Jaitley said that if this law is not passed, then the present system, where there is inadequate protection for depositors will continue. The Financial Resolution and Deposit Insurance Bill, 2017 is pending before the Standing Committee. Jaitley said that he is sure about the advantage of the proposed bill. “Adequate protection is needed for depositors. Now, what should be that larger protection? I am sure the parliament standing committee will consider this and give suggestions”, said FM Jaitley.
“There is talk on social media with regard to legislation being considered by Parliament standing committee. It’s a law which deals with financial stress in case any institution feel stress. This was one area where there was no law. So obviously this gap had to be filled up”, Jaitley added. On Wednesday, Arun Jaitley said that the proposed FRDI Bill will protect the depositors’ rights, denying reports to the contrary. “The objective of the government is to fully protect the interest of the financial institutions and depositors,” added Jaitley.
Meanwhile, Economic Affairs Secretary S C Garg too had said that FRDI Bill proposes to protect existing rights of the depositors. “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. 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 the insolvency of financial service providers. In a statement released to the press, the Finance Ministry has clarified the existing provisions of deposit protection guarantee will be maintained in the proposed FRDI Bill as well.
The FRDI bill provides for the establishment of a resolution corporation with powers relating to the transfer of assets to a healthy financial firm, merger or amalgamation, liquidation to be initiated by an order of the National Company Law Tribunal. It can also designate certain financial providers as systematically important financial institutions, the failure of which may disrupt the entire financial system, said the ‘Statement of Objects and Reasons’ of the bill.