Controversial FRDI Bill with 'bail in' clause for banks deferred

Controversial FRDI Bill with 'bail in' clause for banks deferred

This is because the Joint Committee of Parliament looking into the Financial Resolution and Deposit Insurance (FRDI) Bill 2017 has sought extension of the deadline for submission of its report to the last date of the 2018 Budget session.

The joint committee reportedly made a decision to seek extension up to the last day of Budget Session, 2018, as the report of would not be ready for presentation by December 15.

The so-called "bail-in" clause in the draft legislation has been seen as bringing potential harm to deposits, in the form of savings accounts. Following that, Lok Sabha Speaker Sumitra Mahajan said the lower house has extending the time granted to the joint panel "up to the last day of Budget Session 2018", news agency PTI reported.

The bill, similar to the Insolvency and Bankruptcy Code, 2016, is focused on companies in the financial sector.

The joint parliamentary committee on the bill - having the controversial "bail-in" proposal - headed by senior BJP MP Bhupender Yadav has got an extension to study and submit its report. The bill proposed that a "Resolution Corporation" would look after the process and prevent the banks from going bankrupt. Currently, all deposits up to Rs 1 lakh are protected under the Deposit Insurance and Credit Guarantee Corporation Act, which is sought to be repealed by the proposed bill.

On Saturday, West Bengal Chief Minister and TMC supremo Mamata Banerjee described the bill as the "biggest assault" on financial security of the poor and the middle classes.

"People will lose faith in the banking system if the Financial Resolution and Deposit Insurance (FRDI) Bill is not withdrawn".

Asking the Centre to desist from enacting the "draconian" law, Banerjee wrote that farmers were apprehensive given their dependence on rural co-operative banks.

Bank employee unions had in September urged the finance minister to withdraw the bill after it was tabled in the Lok Sabha in the Monsoon session.

"Now in order to cover up the failures and allow one section of the vested interests to go unpunished, the Government of India wants the common depositors of this country to forego their life-savings".



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