The government has not taken any decision to reintroduce the controversial Financial Resolution and Deposit Insurance Bill (FRDI Bill), the Finance Ministry said on Monday.
The Financial Resolution and Deposit Insurance Bill, 2017, was introduced in the Lok Sabha on August 10, 2017, and, thereafter, was referred to the Joint Committee of Parliament for examination and report thereon, the ministry said in a statement.
However, after a year, the government decided to withdraw the bill as concerns were raised about the protection of depositors’ money if it was passed with the controversial “bail-in” clause that proposed use of depositor money by a failing financial institutions to stay afloat.
The government had withdrawn the FRDI Bill in August 2018 for further comprehensive examination and reconsideration of the subject, it said.
“There are some media reports about reintroduction of the FRDI Bill. This is to clarify that the government has not taken any decision to reintroduce the FRDI Bill,” it said.
The FRDI Bill among other things sought to make an enabling law for creation of an independent resolution corporation to carry out speedy and efficient resolution of financial firms in distress, providing deposit insurance to consumers of certain categories, monitoring of the systemically important financial institutions and protecting the consumers to the extent possible.
The bill drew flak from the opposition and created a lot of controversies as some experts felt that the ”bail-in” clause had the potential to harm deposits in savings bank accounts.
The government had defended the provisions of the bill for months, pointing out that the bail-in clause will not adversely impact depositors.