Do we need an FRDI Bill?

The Bill, in its current form, is almost equivalent to the Deposit Insurance and Credit Guarantee Corporation Act

Recently, there has been a lot of noise in the public domain regarding the proposed Financial Resolution and Deposit Insurance (FRDI) Bill. The resolution method of the FRDI Bill which has spread a lot of confusion among depositors is the “bail-in” clause. It means, in case the financial situation deteriorates, deposits over and above the insured (currently at Rs 1 lakh) could be converted into securities such as shares in the bank.

We believe such a confusion and panic is not strictly justified. Currently, the Deposit Insurance and Credit Guarantee Corporation (DICGC) provides deposit insurance for deposits of commercial banks (ASCBs),