Union Minister of Finance Piyush Goyal has said that the government has decided to withdraw the contentious Financial Resolution and Deposit Insurance (FRDI) Bill, 2017 following widespread public anxiety with regard to the ‘bail-in’ clause to resolve a failing bank and insurance cover on bank deposits. The bill was introduced in the Lok Sabha in August 2017 and subsequently sent to a joint committee of both houses for legislative scrutiny.
The minister has informed that the stakeholders including public have raised worries relating to the provisions of the FRDI Bill, like the use of bail-in instrument to resolve a failing bank, the adequacy of deposit insurance cover and the felt need to revive the insurance limits substantially, and application of resolution framework for public sector banks. He also said that resolution of these issues would take a lot of time and added that the bill will have to be re-examined.
A Joint Parliamentary Committee headed by Bhupendra Yadav, agreed with the proposal of the government to withdraw the bill. The FRDI Bill sought to make an enabling law for creation of an independent Resolution Corporation to carry out speedy and efficient resolution of financial firms in distress, providing deposit insurance to consumers of certain categories, monitoring of the systemically important financial institutions and protecting the consumers to the extent possible.