(Eds: Correcting date in para 5)New Delhi, Dec 7 (PTI) The FRDI Bill, under considerationof a joint parliamentary committee, is depositor friendly andprovides more protection to them compared to existingprovisions, the finance ministry said today.
The statement comes in the wake of "certain misgivings"that appeared in the media about 'bail-in' provisions of theFinancial Resolution and Deposit Insurance Bill, 2017 (FRDIBill).
The provisions in the FRDI Bill do not modify currentprotections for depositors adversely at all, the ministryheld, maintaining that these rather provide additionalprotections in a more transparent manner.
"The FRDI Bill is far more depositor friendly than manyother jurisdictions, which provide for statutory bail-in,where consent of creditors or depositors is not required forbail-in," it added.
The FRDI Bill, introduced in the Lok Sabha on August 10(rpt) 10, 2017, is under consideration of the joint committeeof Parliament. The panel is consulting all the stakeholders onthe provisions of the legislation.
"The FRDI Bill does not propose in any way to limit thescope of powers for the government to extend financing andresolution support to banks, including public sector banks.
The government's implicit guarantee for public sector banksremains unaffected," it said.
The government further said Indian banks have adequatecapital and are also under prudent regulation and supervisionto ensure safety and soundness as well as systemic stability.
The existing laws ensure integrity, security and safety of thebanking system.
In India, it said all possible steps and policy measuresare taken to prevent failure of banks and protection ofinterests of depositors through issue of directions/promptcorrective action measures, capital adequacy and prudentialnorms.
The FRDI Bill will "strengthen" the system by adding acomprehensive resolution regime which will help ensure that,in the rare event of failure of a financial service provider,"there is a system of quick, orderly and efficient resolutionin favour of depositors", the statement said.
The Bill also seeks to deal with insolvency of financialservice providers.
It provides for establishment of a resolution corporationwith powers relating to transfer of assets to a healthyfinancial firm, merger or amalgamation, liquidation to beinitiated by an order of the National Company Law Tribunal.
It can also designate certain financial providers assystematically important financial institutions, the failureof which may disrupt the entire financial system, said the'Statement of Objects and Reasons' of the Bill. PTI NKD CSARDARD.
This is unedited, unformatted feed from the Press Trust of India wire.