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FM Arun Jaitley’s comment days after govt said the clauses in the Financial Resolution and Deposit
Insurance Bill 2017 (FRDI Bill) are aimed at protecting the interests of depositors. Photo: HT
New Delhi: Seeking to allay concerns of depositors over provisions of FRDI Bill,
finance minister Arun Jaitley on Monday said the government will fully protect public
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3/19/2018 FRDI Bill: Arun Jaitley says public deposits will be protected - Livemint
Jaitley said the government’s massive Rs2.11 trillion bank recapitalisation plan was to
strengthen banks and there was no question of any lender failing. If any such situation
arises, the government will “fully protect” the deposits made by customers, the finance
minister said here adding that “the government is very clear about it”.
Jaitley made the comment to allay concerns with regard to a provision in the FRDI Bill
2017, first introduced in the Lok Sabha in August this year and currently undergoing
scrutiny by a joint parliamentary committee. The so-called “bail-in” clause in the draft
legislation has been commented upon by experts as of bringing potential harm to
deposits, in the form of savings accounts
“The FRDI Bill is before the joint committee of Parliament. Whatever are the
recommendations of the committee, the government will consider,” he said. He said
rumours are being spread about the provisions of the bill.
“The government has already clarified and said it is committed to strengthen PSU
banks and financial institutions. About Rs 2.11 lakh crore is being pumped in to
strengthen the public sector banks.” The FRDI Bill proposes to create a framework for
overseeing financial institutions such as banks, insurance companies, non-banking
financial services (NBFC) companies and stock exchanges in case of insolvency.
The “resolution corporation”, proposed in the draft FRDI Bill, would look after the
process and prevent the banks from going bankrupt. It would do this by “writing down
of the liabilities”, a phrase some have interpreted as a “bail in”.
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The draft FRDI bill empowers resolution corporation to cancel the liability of a failing
bank or convert thenature of the liability. It does not specify deposit insurance
amount. At present, all deposits up to Rs1 lakh are protected under the Deposit
Insurance and Credit Guarantee Corporation Act that is sought to be repealed by this
bill.
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3/19/2018 FRDI Bill: Arun Jaitley says public deposits will be protected - Livemint
BAIL-IN CLAUSE
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3/19/2018 FRDI Bill: Arun Jaitley says public deposits will be protected - Livemint
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