As the rumour began doing the rounds on social media that the FRDI Bill is likely to be introduced in the monsoon session, the govt news agency PIB hastened to clarify the situation, leading to a huge sigh of relief among co-operators.
In a press release PIB said “The Financial Resolution and Deposit Insurance Bill, 2017 (FRDI Bill) was introduced in Lok Sabha on 10th August, 2017 and, thereafter, was referred to the Joint Committee of Parliament for examination and report thereon.”
“The Government had withdrawn the FRDI Bill in August, 2018 for further comprehensive examination and reconsideration of the subject”, the release added.
“There are some media reports about the reintroduction of the FRDI Bill. This is to clarify that the Government has not taken any decision to reintroduce the FRDI Bill”, it further clarified.
The FRDI Bill had a ‘bail-in’ clause for resolution of bank failures which was regarded as a step against the savings account holders. Introduced in 2017, the Bill was later withdrawn in 2018 after a lot of hue and cry.
The withdrawal of the bill meant the status quo prevails and the deposits will be secured under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
It bears recall that the apex body of urban cooperative banks of India NAFCUB has made a representation before the Joint Parliamentary Committee (JPC) headed by Bhupendra Yadav on the proposed Financial Regulation and Deposit Insurance Bill 2017.
The Bill aimed at dealing with bankruptcies in banks, insurance companies, and other financial intermediaries through a ‘Resolution Corporation’ and a ‘Corporation Insurance Fund’.
Later, this bill was modified the direct reference to the controversial ‘bail-in’ clause was withdrawn while authorising a Resolution Authority to modify all contracts, claimed media sources. The government has been trying to introduce a revised Financial Sector Development and Regulation (Resolution) Bill, 2019 (FSDR), they claimed.
It also may not be out of place here to mention that in the wake of PMC Bank scam, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has been permitted to increase Deposit Insurance Coverage to Rs. 5 lakh from Rs.1 lakh per depositor, bringing a huge relief to depositors.