Finance Minister Arun Jaitley on Thursday said the proposed FRDI Bill protects the rights of depositors, denying reports to the contrary.
“The Financial Resolution and Deposit Insurance Bill, 2017 is pending before the Standing Committee. The objective of the government is to fully protect the interest of the financial institutions and depositors,” Mr. Jaitley said in a tweet. The government stands committed to this objective, he added.
According to Economic Affairs Secretary S.C. Garg, the FRDI Bill proposes to protect existing rights of the depositors. “There is no dilution thereof. Instead, it enhances present protections in certain ways. Principal guarantee for PSU Banks’ depositors come from government ownership which also remains completely unaffected,” Mr. Garg said.
The government tabled the Financial Resolution and Deposit Insurance Bill, 2017 in August in the Lok Sabha, which was referred to a Joint Committee of Parliament. The Bill seeks to deal with the insolvency of financial service providers.
In a statement released to the press, the Finance Ministry has clarified the existing provisions of deposit protection guarantee will be maintained in the proposed FRDI Bill as well.
"The FRDI Bill 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. Government’s implicit guarantee for public sector banks remains unaffected," the statement read.