New Delhi: Union Minister for Finance and Corporate Affairs, Arun Jaitley during the 4th meeting of Pre-Budget Consultations with stakeholders groups from Social Sector in connection with the forthcoming Union Budget 2018-19, in New Delhi on Wednesday. PTI Photo by Kamal Singh(PTI12_6_2017_000114A)
The government on Thursday defended the provisions of the Financial Resolution and Deposit Insurance (FRDI) Bill after it came under attack for one of its clauses allegedly allowing depositors' money being used for failing financial institutions stay afloat.
"The objective of the FRDI Bill is to fully protect the interests of the financial institutions and depositors," Finance Minister Arun Jaitley said in a tweet.
"The FRDI Bill will strengthen the system by adding a comprehensive resolution regime that 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," he said.
"Certain misgivings have been expressed in the media regarding 'bail-in' provisions of the FRDI Bill. The provisions contained in the FRDI Bill, as introduced in the Parliament, do not modify present protections to the depositors adversely at all," Jaitley said.
The FRDI Bill, 2017, introduced in Lok Sabha in August, is under consideration of a joint committee of Parliament, which is in the process of consulting all the stakeholders on the provisions of the bill.
"The FRDI Bill is far more depositor-friendly than many other jurisdictions, which provide for statutory bail-in, where consent of creditors/depositors is not required for bail-in," the Finance Ministry said in a statement.
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. The government's implicit guarantee for public sector banks remains unaffected, it said.