Defending the provisions of the Financial Resolution and Deposit Insurance Bill 2017, or FRDI Bill, the government on Thursday said the clauses in the legislation are aimed at protecting the interests of depositors.
An online petition on Change.org against the Financial Resolution and Deposit Insurance (FRDI) Bill, 2017, has gone viral on social media, seeking public support against what it terms as an attempt to "allow a government entity to use depositors' money to save a bank on the verge of bankruptcy". "The objective of the government is to fully protect the interest of the financial institutions and depositors", Jaitley tweeted.
Shutting out misgivings in regards to provisions of the FRDI bill, the Ministry said, "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".
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The FRDI Bill aims to limit the fallout of the failure of institutions like banks, insurance companies, non-banking financial companies, pension funds and stock exchanges.
The FRDI Bill will "strengthen" the system by adding a comprehensive resolution regime which will help ensure that, in the rare event of failure of a financial service provider, "there is a system of quick, orderly and efficient resolution in favour of depositors", the statement said.
The petition was started by a Mumbai-based individual, Shilpa Shree, with a single signature and has got over 40,000 signups within 24 hours, supporting her appeal to Finance Minister Arun Jaitley to not let this bill pass with the "bail-in" provision. The bill seeks to deal with insolvency of financial service providers.
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The bill was open for comments and views till October 31, 2016. The corporation may also investigate their activities. Earlier, stakeholders raised objections over some provisions of the bill, including a "bail-in" clause and no specific deposit insurance amount. The committee will submit its report in the upcoming winter session of Parliament beginning 15 December.
Subhash Chandra Garg, Secretary, Department of Economic Affairs on Wednesday said, "FRDI Bill proposes to protect existing rights of the depositors". Instead it enhances present protections in certain ways.
The government further said Indian banks have adequate capital and are also under prudent regulation and supervision to ensure safety and soundness as well as systemic stability.
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