Amid concerns over FRDI bill, Arun Jaitley says govt will ‘fully protect’ public deposits
Finance Minister Arun Jaitley. (Express Photo by Prem Nath Pandey.) Finance Minister Arun Jaitley. (Express Photo by Prem Nath Pandey.)
Union Finance Minister Arun Jaitley on Monday sought to allay concerns of depositors over provisions of a draft law, insisting that the government is committed to fully protect public deposits in financial institutions. He, however, hinted at openness to changes in the proposed Financial Resolution and Deposit Insurance (FRDI) Bill, 2017.
Maintaining that there was no question of any lender failing, Jaitley said the government’s massive Rs 2.11 lakh crore capital infusion plan in banks was to bolster the public sector banks. If any such situation arises, Jaitley said, the government will “fully protect” the deposits made by customers. “The government is very clear about it,” he added.
His comments come amid growing concerns with regard to a provision in the FRDI bill, which was first introduced in the Lok Sabha in August this year and is currently undergoing scrutiny by a joint parliamentary committee.
According to experts, the so-called “bail-in” clause in the draft legislation may bring potential harm to deposits in the form of savings accounts.
“The Bill is before the joint committee of Parliament. Whatever are the recommendations of the committee, the government will consider,” he said, while stating that 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.
As per the draft bill, the ‘Resolution Corporation’ would look after the process and prevent the banks from going bankrupt by “writing down of the liabilities”, a phrase some have interpreted as a “bail in”.
The draft bill empowers Resolution Corporation to cancel the liability of a failing bank or convert the nature of the liability.
With PTI inputs
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