A day after finance Minister Arun Jaitley sought to allay the concerns over the Financial Resolution and Deposit Insurance (FRDI) Bill, 2017 saying that the government will fully protect public deposits in financial institutions, Prime Minister Narendra Modi on Wednesday cautioned the public against paying heed to rumours being spread about depositors’ money being put at risk through provisions of the FRDI Bill.
Addressing the 90th annual general meeting of Ficci in New Delhi on Wednesday, the PM said the government is working on strengthening the banking system of the country. “Rumours are being spread regarding FRDI. The government is working for securing interest of customers and protecting their deposits, but contrary news is being spread,” Modi said.The PM noted that when banks and customers are protected, the country’s interest is safe. He urged Ficci to take the initiative to dispel such rumours.
On Tuesday, Jaitley had also said the Rs 2.11 lakh crore capital infusion was aimed at strengthening banks and there was no question of any lender failing.
The proposed FRDI Bill has been in news for its contentious ‘bail-in’ clause, which some experts believe portends risk to deposits in savings accounts. The bill, which aims to tackle insolvency, purportedly allows failing banks to use depositors’ money to cut losses.
The draft law, introduced in the Lok Sabha in August, is currently undergoing scrutiny by a joint parliamentary committee.
The FRDI Bill proposes to create a framework for overseeing financial institutions such as banks, insurance companies, non-banking financial companies and stock exchanges in case of insolvency.
The Resolution Corporation, proposed in the draft bill, would look after the process and prevent the banks from going bankrupt. This will be done by writing down of the liabilities. The draft bill empowers Corporation to cancel the liability of a failing bank or convert the nature of the liability.