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Bhargavi Zaveri: New law should have firm foundations

By providing a definitive legal framework to deal with the resolution of financial firms, the draft Financial Resolution and Deposit Insurance Bill takes a leap of sorts in Indian financial regulation. But some chinks in the armour need to be fixed

Bhargavi Zaveri

Late last month, the Ministry of Finance solicited comments on a draft Financial Resolution and Deposit Insurance Bill, which is the proposed legal framework for resolving financial firms. The draft Bill complements the recently enacted Bankruptcy Code, which does not automatically apply to the resolution of financial firms. The draft Bill also plugs another gaping hole in the Indian legal framework on the identification and resolution of systemically important financial institutions (SIFI). Simply put, SIFIs are firms, the breakdown of which can lead to a breakdown of the entire financial ...