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Your money in bank is safe, assures FinMin on new FDRI Bill

The consent of creditors or depositors is not required for bail-in

Press Trust of India  |  New Delhi 

Bank recapitalisation plan, Banks, Indian Banks

The Bill, under consideration of a joint parliamentary committee, is depositor friendly and provides more protection to them compared to existing provisions, the ministry said on Thursday.

The statement comes in the wake of "certain misgivings" that appeared in the media about 'bail-in' provisions of the Financial Resolution and Deposit Bill, 2017 (Bill).

The provisions in the Bill do not modify current protections for depositors adversely at all, the ministry held, maintaining that these rather provide additional protections in a more transparent manner.

"The is far more depositor friendly than many other jurisdictions, which provide for statutory bail-in, where the consent of creditors or depositors is not required for bail-in," it added.

The FRDI Bill, introduced in the on August 11, 2017, is under consideration of the joint committee of The panel is consulting all the stakeholders on the provisions of the legislation.

"The does not propose in any way to limit the scope of powers for the government to extend financing and resolution support to banks, including public sector banks. The government's implicit guarantee for public sector banks remains unaffected," it said.

The government further said Indian banks have adequate capital and are also under prudent regulation and supervision to ensure safety and soundness as well as systemic stability. The existing laws ensure integrity, security and safety of the banking system.

In India, it said all possible steps and policy measures are taken to prevent failure of banks and protection of interests of depositors through the issue of directions/prompt corrective action measures, capital adequacy and prudential norms.

The will "strengthen" the system by adding a comprehensive 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 resolution in favour of depositors", the statement said.

The Bill also seeks to deal with the insolvency of financial service providers.

It provides for the establishment of a resolution corporation with powers relating to the transfer of assets to a healthy financial firm, merger or amalgamation, liquidation to be initiated by an order of the

It can also designate certain financial providers as systematically important financial institutions, the failure of which may disrupt the entire financial system, said the 'Statement of Objects and Reasons' of the Bill.

First Published: Thu, December 07 2017. 17:25 IST